Chapterg 1g Expandi
nggabroad:
Motivations,g means,g andg mentalities
True/False
1. Theglargest g MNEsg areg equivalent g ing theirg economicg importanceg toglessg developed geconomiesg s
uchg asg Nigeria,g Moldova,g org Jamaica.
ANS:Falseg (Salesg of g theglargest g MNEsg exceedgthegGDPsg ofglessg developed gcountries.)g Difficulty
:g Moderate
Pg:g 16g and g Tableg 1.3g (16)
Subject:g MNEg influenceg ing theg globalg economy
2. Theg processg of g internationalizationg followed g byg most g firmsg isg usuallygwell-
thought g out g ing advancegandg typicallyg buildsg ong ag combinationg of g rationalg analysis,g plannin
gg and g implementation.
ANS:Falseg (Itg isg moreg likelyg ag combinationg of g rationalg analysis,g opportunism,g andg luck.g Ing reg
ardsgtog opportunism,g severalg studiesg havegfound gthatg mostg firmsg beging exportinggduegtog ang uns
olicited g export g order.)
Difficulty:gModerateg
Pg:g 22-23
Subject:g Theg Processg of g Internationalization
3. Allg companiesg internationalizeg ing ang incrementalg manner.g First,g theyg makeg ang initialg commi
tment g of g resourcesg togthegforeigng market ging ordergtog secureglocalg market g knowledge.g Buildin
gg ong thisg knowledge,g theyg makeg subsequent gresourceg commitments,g eventuallyg leadingg tog h
igherg levelsg of g investment g ing theg foreigng market.
ANS:Falseg (Thereg areg manyg exceptionsg tog theg incrementalg approach.g Someg firmsg areg “borng glo
bals”.g Otherg firmsg retaing theg sameg mode,g includingglevelg of gsubsidiaryginvolvement,g ing allg foreig
ng markets.)
Difficulty:gModerateg
Pg:g 23
Subject:g Theg Processg of g Internationalization
4. A g joint g ventureg isg agcontractualgmodegofgforeigng entryginvolvingg ag highglevelg of g resourceg c
ommitment g byg allg partners.
ANS:Falseg (Ag JVg willg notgtypicallyg requireg asg highg ag resourceg commitment g asgweg wouldg seeg ing
whollyg owned g subsidiaries.g Ing addition,gthereg isg significant g variabilityg ing theg levelg of g resourcesg c
ontributed g byg partners.)
1
,Difficulty:g Moderateg Pg:
24g (Figureg 1.2)g Subject:
Foreigng entrygmode
5. Emergingg motivationsg forg internationalizationg includeg theg desireg tog enhanceg theg firm’sg
competitiveg positiong and g theg desireg tog developg globalg scanningg capabilities.
ANS:Trueg Diffi
culty:
ModeratePg:
19-20
Subject:g Emergingg Motivations
6. Forg ang MNEg tog exist,g first g foreigng countriesg must g provideg location-
specificg advantagesg tog attract g theg companyg toginvest g there,g second gtheg companyg must ghaveg ow
nership-
specificg advantagesg that g counteract g itsgliabilityg of g foreignness,g third g theg companyg must g haveg t
heg organizationalg capabilitygtog leverageg itsg strategicg advantagesg moreg effectivelyginternallygth
ang externally.
ANS:Trueg Difficulty
:gModerateg Pg:g 22
Subject:g Prerequisitesg forg internationalization
7. Ang MNEg withg ang‘internationalg mentality’g willg typicallygbeg managed gasgag coordinatedgf
ederation.
ANS:Trueg Difficulty
:gModerateg Pg:g 26
Subject:g Theg evolvingg mentality:g internationalg tog transnational
8. Ang MNEg withgag‘multinationalg mentality’g willg typicallygbeg managed g asgag coordinatedgf
ederation.
ANS:Falseg (It g willg typicallygbeg managed gasg agdecentralizedg federation.)Difficulty:g Moderat
e
Pg:g 26-27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
9. Ang MNEg withg ag ‘globalg mentality’g willg typicallyg manageg itsg operationsg centrally.
2
,ANS:Trueg Difficulty
:gModerateg Pg:g 27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
10. Ang MNEg withg ag ‘transnationalg mentality’g willg typicallygbeg managed g asg ang integrated g network.
ANS:Trueg Difficulty
:gModerateg Pg:g 27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
11. Theg coreg advantageg multinationalg mentalityghasg overg globalg mentalitygisg moreg efficient g
manufacturing.
ANS:Falseg (it g isg theg otherg waygaround)Difficulty:
Moderate
g Pg:g 26-
27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
12. Raymond g Vernon’sg articleg “Goneg aregtheg cashg cowsg of g yesteryear”ghighlightsg ag company’sg
globalg scanningg and g learningg capability.
ANS:Trueg Diffi
culty:gHard
Pgg 19g (footnoteg 10)
Subject:g Emergingg Motivations
13. Onlygoneg articleg furtherg developsg thegideagthat g“theg processg ofgdevelopinggtheseg strategicg andgo
rganizationalg attributesg liesg at g theg heart g of gtheginternationalizationg processg throughg whichg agco
mpanyg buildsg itsg positiong ing world g markets.
ANS:Falseg (2g articlesg furthergdevelopgtheg idea:g A.g Jonssong andg N.g J.g Foss,g “Internationalg exp
ansiong throughg flexibleg replication:g learningg fromg theg internationalizationg experienceg of gIKE
A,”g Journalg of g Internationalg Businessg Studies,g 42:9g (2011),
1079–
1102g and g J.g W.g LugandgP.g W.gBeamish,g “Internationalg diversificationg and gfirmg performance:g theg S-
curveg hypothesis,”g Academygof g Management g Journal,g 47:4g (2004),g 598–609.)g Difficulty:g Hard
Pg:g 22-23g (footnoteg 15)
Subject:g Processg of g Internationalization
3
, Multipleg Choice
14. Ang MNEg isg a(n):
a. import-export g companygthat g activelygtradesg ing foreigng markets.
b. companygthat g passivelyg managesg itsg substantialg foreigng direct g investment.
c. import-export g companygthat g activelygmanagesg itsg foreigng investment g portfolio.
d. companygthat g activelygmanagesg substantialg foreigng direct g investment.
ANS:d g (Ag trueg MNEg isg ag companygthat g hasg substantialgdirect g investmentg ingforeigng countries,g a
ndg thatg activelygmanagesg andg regardsg itsgforeigng operationsg asg integralg partsg ofg theg company,g b
othg strategicallyg andg organizationally.g Companiesg that g eithergdog notg holdg equityg positionsg org h
old g minorg equityg positionsg ing overseasg venturesg without g org withg veryg lowg management
involvement g maygbeg viewed g asg “international”g companiesg but g would gnotg begregardedgasg multina
tionalg enterprises.)
Difficulty:gModerateg
Pg:g 12
Subject:g MNEg definition
15. Threeg prerequisitesg that g must g beg satisfied gbeforeg ag nationalg firmg cang transformg itself g intog ag
multinationalg firmg include:
a. scale-based gadvantages,g ownership-specificg advantages,g and g contractualg capabilities.
b. location-specificg advantages,g ownership-specificg advantages,g and g organizationalg capabilities.
c. scale-based g advantages,g ownership-specificg advantages,g and g organizationalg capabilities.
d. location-specificg advantages,g knowledgeg advantages,g and g organizationalg capabilities.
ANS:bg (a,g c,g and g d g areg incorrect g sinceg scale-based g advantages,g knowledge-
based g advantages,g andg contractualg capabilitiesg are,g byg themselves,g insufficient g tog justifyg theg int
ernationalizationg of g operations.g Withg muchg lessg effort g agcompanyg ofteng cang sellg org licenseg itstec
hnologyg tog foreigng producers,g franchiseg itsg brandg nameginternationally,g org sellg itsg productsg abroa
d g throughg localg distributors,g without g havingg tog set g upg itsg owng offshoreg operations.)g Difficulty:g
Moderateg tog hard
Pg:g 22
Subject:g Prerequisitesg forg internationalization
16. Whichg of g theg followingg correctlygdescribesg theg sequentialg evolutiong ing management g thinkingg
withg respect g tog theg strategicg roleg of g foreigng operationsg ing emergingg MNEs?
a. globalgmentality,g multinationalg mentality,g internationalg mentality,g transnationalg mentality.
b. internationalg mentality,g globalg mentality,g transnationalg mentality,g multinationalg mentality.
c. multinationalg mentality,g globalg mentality,g internationalg mentality,g transnationalg mentality.
d. internationalgmentality,g multinationalg mentality,g globalg mentality,g transnationalg mentality.
ANS:d g (a,g b,gandg cgaregincorrect g since,g althoughg theygdescribeg thegdifferent g waysg ofgmanagement gth
inkingg regardingg theg strategicg roleg of g foreigng operationsg ing emergingg MNEs,g theydognot g describeg t
heg evolutiong of g thisg thinkingg ing theg correct g sequence.)
4
nggabroad:
Motivations,g means,g andg mentalities
True/False
1. Theglargest g MNEsg areg equivalent g ing theirg economicg importanceg toglessg developed geconomiesg s
uchg asg Nigeria,g Moldova,g org Jamaica.
ANS:Falseg (Salesg of g theglargest g MNEsg exceedgthegGDPsg ofglessg developed gcountries.)g Difficulty
:g Moderate
Pg:g 16g and g Tableg 1.3g (16)
Subject:g MNEg influenceg ing theg globalg economy
2. Theg processg of g internationalizationg followed g byg most g firmsg isg usuallygwell-
thought g out g ing advancegandg typicallyg buildsg ong ag combinationg of g rationalg analysis,g plannin
gg and g implementation.
ANS:Falseg (Itg isg moreg likelyg ag combinationg of g rationalg analysis,g opportunism,g andg luck.g Ing reg
ardsgtog opportunism,g severalg studiesg havegfound gthatg mostg firmsg beging exportinggduegtog ang uns
olicited g export g order.)
Difficulty:gModerateg
Pg:g 22-23
Subject:g Theg Processg of g Internationalization
3. Allg companiesg internationalizeg ing ang incrementalg manner.g First,g theyg makeg ang initialg commi
tment g of g resourcesg togthegforeigng market ging ordergtog secureglocalg market g knowledge.g Buildin
gg ong thisg knowledge,g theyg makeg subsequent gresourceg commitments,g eventuallyg leadingg tog h
igherg levelsg of g investment g ing theg foreigng market.
ANS:Falseg (Thereg areg manyg exceptionsg tog theg incrementalg approach.g Someg firmsg areg “borng glo
bals”.g Otherg firmsg retaing theg sameg mode,g includingglevelg of gsubsidiaryginvolvement,g ing allg foreig
ng markets.)
Difficulty:gModerateg
Pg:g 23
Subject:g Theg Processg of g Internationalization
4. A g joint g ventureg isg agcontractualgmodegofgforeigng entryginvolvingg ag highglevelg of g resourceg c
ommitment g byg allg partners.
ANS:Falseg (Ag JVg willg notgtypicallyg requireg asg highg ag resourceg commitment g asgweg wouldg seeg ing
whollyg owned g subsidiaries.g Ing addition,gthereg isg significant g variabilityg ing theg levelg of g resourcesg c
ontributed g byg partners.)
1
,Difficulty:g Moderateg Pg:
24g (Figureg 1.2)g Subject:
Foreigng entrygmode
5. Emergingg motivationsg forg internationalizationg includeg theg desireg tog enhanceg theg firm’sg
competitiveg positiong and g theg desireg tog developg globalg scanningg capabilities.
ANS:Trueg Diffi
culty:
ModeratePg:
19-20
Subject:g Emergingg Motivations
6. Forg ang MNEg tog exist,g first g foreigng countriesg must g provideg location-
specificg advantagesg tog attract g theg companyg toginvest g there,g second gtheg companyg must ghaveg ow
nership-
specificg advantagesg that g counteract g itsgliabilityg of g foreignness,g third g theg companyg must g haveg t
heg organizationalg capabilitygtog leverageg itsg strategicg advantagesg moreg effectivelyginternallygth
ang externally.
ANS:Trueg Difficulty
:gModerateg Pg:g 22
Subject:g Prerequisitesg forg internationalization
7. Ang MNEg withg ang‘internationalg mentality’g willg typicallygbeg managed gasgag coordinatedgf
ederation.
ANS:Trueg Difficulty
:gModerateg Pg:g 26
Subject:g Theg evolvingg mentality:g internationalg tog transnational
8. Ang MNEg withgag‘multinationalg mentality’g willg typicallygbeg managed g asgag coordinatedgf
ederation.
ANS:Falseg (It g willg typicallygbeg managed gasg agdecentralizedg federation.)Difficulty:g Moderat
e
Pg:g 26-27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
9. Ang MNEg withg ag ‘globalg mentality’g willg typicallyg manageg itsg operationsg centrally.
2
,ANS:Trueg Difficulty
:gModerateg Pg:g 27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
10. Ang MNEg withg ag ‘transnationalg mentality’g willg typicallygbeg managed g asg ang integrated g network.
ANS:Trueg Difficulty
:gModerateg Pg:g 27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
11. Theg coreg advantageg multinationalg mentalityghasg overg globalg mentalitygisg moreg efficient g
manufacturing.
ANS:Falseg (it g isg theg otherg waygaround)Difficulty:
Moderate
g Pg:g 26-
27
Subject:g Theg evolvingg mentality:g internationalg tog transnational
12. Raymond g Vernon’sg articleg “Goneg aregtheg cashg cowsg of g yesteryear”ghighlightsg ag company’sg
globalg scanningg and g learningg capability.
ANS:Trueg Diffi
culty:gHard
Pgg 19g (footnoteg 10)
Subject:g Emergingg Motivations
13. Onlygoneg articleg furtherg developsg thegideagthat g“theg processg ofgdevelopinggtheseg strategicg andgo
rganizationalg attributesg liesg at g theg heart g of gtheginternationalizationg processg throughg whichg agco
mpanyg buildsg itsg positiong ing world g markets.
ANS:Falseg (2g articlesg furthergdevelopgtheg idea:g A.g Jonssong andg N.g J.g Foss,g “Internationalg exp
ansiong throughg flexibleg replication:g learningg fromg theg internationalizationg experienceg of gIKE
A,”g Journalg of g Internationalg Businessg Studies,g 42:9g (2011),
1079–
1102g and g J.g W.g LugandgP.g W.gBeamish,g “Internationalg diversificationg and gfirmg performance:g theg S-
curveg hypothesis,”g Academygof g Management g Journal,g 47:4g (2004),g 598–609.)g Difficulty:g Hard
Pg:g 22-23g (footnoteg 15)
Subject:g Processg of g Internationalization
3
, Multipleg Choice
14. Ang MNEg isg a(n):
a. import-export g companygthat g activelygtradesg ing foreigng markets.
b. companygthat g passivelyg managesg itsg substantialg foreigng direct g investment.
c. import-export g companygthat g activelygmanagesg itsg foreigng investment g portfolio.
d. companygthat g activelygmanagesg substantialg foreigng direct g investment.
ANS:d g (Ag trueg MNEg isg ag companygthat g hasg substantialgdirect g investmentg ingforeigng countries,g a
ndg thatg activelygmanagesg andg regardsg itsgforeigng operationsg asg integralg partsg ofg theg company,g b
othg strategicallyg andg organizationally.g Companiesg that g eithergdog notg holdg equityg positionsg org h
old g minorg equityg positionsg ing overseasg venturesg without g org withg veryg lowg management
involvement g maygbeg viewed g asg “international”g companiesg but g would gnotg begregardedgasg multina
tionalg enterprises.)
Difficulty:gModerateg
Pg:g 12
Subject:g MNEg definition
15. Threeg prerequisitesg that g must g beg satisfied gbeforeg ag nationalg firmg cang transformg itself g intog ag
multinationalg firmg include:
a. scale-based gadvantages,g ownership-specificg advantages,g and g contractualg capabilities.
b. location-specificg advantages,g ownership-specificg advantages,g and g organizationalg capabilities.
c. scale-based g advantages,g ownership-specificg advantages,g and g organizationalg capabilities.
d. location-specificg advantages,g knowledgeg advantages,g and g organizationalg capabilities.
ANS:bg (a,g c,g and g d g areg incorrect g sinceg scale-based g advantages,g knowledge-
based g advantages,g andg contractualg capabilitiesg are,g byg themselves,g insufficient g tog justifyg theg int
ernationalizationg of g operations.g Withg muchg lessg effort g agcompanyg ofteng cang sellg org licenseg itstec
hnologyg tog foreigng producers,g franchiseg itsg brandg nameginternationally,g org sellg itsg productsg abroa
d g throughg localg distributors,g without g havingg tog set g upg itsg owng offshoreg operations.)g Difficulty:g
Moderateg tog hard
Pg:g 22
Subject:g Prerequisitesg forg internationalization
16. Whichg of g theg followingg correctlygdescribesg theg sequentialg evolutiong ing management g thinkingg
withg respect g tog theg strategicg roleg of g foreigng operationsg ing emergingg MNEs?
a. globalgmentality,g multinationalg mentality,g internationalg mentality,g transnationalg mentality.
b. internationalg mentality,g globalg mentality,g transnationalg mentality,g multinationalg mentality.
c. multinationalg mentality,g globalg mentality,g internationalg mentality,g transnationalg mentality.
d. internationalgmentality,g multinationalg mentality,g globalg mentality,g transnationalg mentality.
ANS:d g (a,g b,gandg cgaregincorrect g since,g althoughg theygdescribeg thegdifferent g waysg ofgmanagement gth
inkingg regardingg theg strategicg roleg of g foreigng operationsg ing emergingg MNEs,g theydognot g describeg t
heg evolutiong of g thisg thinkingg ing theg correct g sequence.)
4
