Chapterm1mExpand
ingmabroad:
Motivations,mmeans,mandmmentalities
True/False
1. ThemlargestmMNEsmaremequivalentminmtheirmeconomicmimportancemtomlessmdevelopedmeconomi
esmsuchmasmNigeria,mMoldova,mormJamaica.
ANS:Falsem(SalesmofmthemlargestmMNEsmexceedmthemGDPsmofmlessmdevelopedmcountrie
s.)mDifficulty:mModerate
Pg:m16mandmTablem1.3m(16)
Subject:mMNEminfluenceminmthemglobalmeconomy
2. Themprocessmofminternationalizationmfollowedmbymmostmfirmsmismusuallymwell-
thoughtmoutminmadvancemandmtypicallymbuildsmonmamcombinationmofmrationalmanalysis,mplan
ningmandmimplementation.
ANS:Falsem(Itmismmoremlikelymamcombinationmofmrationalmanalysis,mopportunism,mandmluck.mInm
regardsmtomopportunism,mseveralmstudiesmhavemfoundmthatmmostmfirmsmbeginmexportingmduemtom
anmunsolicitedmexportmorder.)
Difficulty:mModerate
Pg:m22-23
m
Subject:mThemProcessmofmInternationalization
3. Allmcompaniesminternationalizeminmanmincrementalmmanner.mFirst,mtheymmakemanminitialmco
mmitmentmofmresourcesmtomthemforeignmmarketminmordermtomsecuremlocalmmarketmknowledge.
Buildingmonmthismknowledge,mtheymmakemsubsequentmresourcemcommitments,meventuallyml
m
eadingmtomhighermlevelsmofminvestmentminmthemforeignmmarket.
ANS:Falsem(Theremaremmanymexceptionsmtomthemincrementalmapproach.mSomemfirmsmarem“bor
nmglobals”.mOthermfirmsmretainmthemsamemmode,mincludingmlevelmofmsubsidiaryminvolvement,mi
nmallmforeignmmarkets.)
Difficulty:mModerate
Pg:m23
m
Subject:mThemProcessmofmInternationalization
4. Amjointmventuremismamcontractualmmodemofmforeignmentryminvolvingmamhighmlevelmofmresou
rcemcommitmentmbymallmpartners.
ANS:Falsem(AmJVmwillmnotmtypicallymrequiremasmhighmamresourcemcommitmentmasmwemwouldmse
eminmwhollymownedmsubsidiaries.mInmaddition,mtheremismsignificantmvariabilityminmthemlevelmofmres
ourcesmcontributedmbympartners.)
1
,Difficulty:m ModeratemPg:
24m(Figurem1.2)mSubject:
Foreignmentrymmode
5. Emergingmmotivationsmforminternationalizationmincludemthemdesiremtomenhancemthemfir
m’smcompetitivempositionmandmthemdesiremtomdevelopmglobalmscanningmcapabilities.
ANS:Truem
Difficulty:
ModeratePg:
19-20
Subject:mEmergingmMotivations
6. FormanmMNEmtomexist,mfirstmforeignmcountriesmmustmprovidemlocation-
specificmadvantagesmtomattractmthemcompanymtominvestmthere,msecondmthemcompanymmustmhave
mownership-
specificmadvantagesmthatmcounteractmitsmliabilitymofmforeignness,mthirdmthemcompanymmustmha
vemthemorganizationalmcapabilitymtomleveragemitsmstrategicmadvantagesmmoremeffectivelymintern
allymthanmexternally.
ANS:TruemDifficult
y:mModeratemPg:m22
Subject:mPrerequisitesmforminternationalization
7. AnmMNEmwithmanm‘internationalmmentality’mwillmtypicallymbemmanagedmasmamcoordinat
edmfederation.
ANS:TruemDifficult
y:mModeratemPg:m26
Subject:mThemevolvingmmentality:minternationalmtomtransnational
8. AnmMNEmwithmam‘multinationalmmentality’mwillmtypicallymbemmanagedmasmamcoordinat
edmfederation.
ANS:Falsem(Itmwillmtypicallymbemmanagedmasmamdecentralizedmfederation.)Difficult
y:mModerate
Pg:m26-27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
9. AnmMNEmwithmam‘globalmmentality’mwillmtypicallymmanagemitsmoperationsmcentrally.
2
,ANS:TruemDifficult
y:mModeratemPg:m27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
10. AnmMNEmwithmam‘transnationalmmentality’mwillmtypicallymbemmanagedmasmanmintegratedmnetwork.
ANS:TruemDifficult
y:mModeratemPg:m27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
11. Themcoremadvantagemmultinationalmmentalitymhasmovermglobalmmentalitymismmoremefficie
ntmmanufacturing.
ANS:Falsem(itmismthemothermwaymaround)Difficulty:
Moderatem
Pg:m26-27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
12. RaymondmVernon’smarticlem“Gonemaremthemcashmcowsmofmyesteryear”mhighlightsmamcompan
y’smglobalmscanningmandmlearningmcapability.
ANS:TruemDiffi
culty:mHard
Pgm19m(footnotem10)
Subject:mEmergingmMotivations
13. Onlymonemarticlemfurthermdevelopsmthemideamthatm“themprocessmofmdevelopingmthesemstrategicma
ndmorganizationalmattributesmliesmatmthemheartmofmtheminternationalizationmprocessmthroughmwhi
chmamcompanymbuildsmitsmpositionminmworldmmarkets.
ANS:Falsem(2marticlesmfurthermdevelopmthemidea:mA.mJonssonmandmN.mJ.mFoss,m“Internationalm
expansionmthroughmflexiblemreplication:mlearningmfrommtheminternationalizationmexperiencem
ofmIKEA,”mJournalmofmInternationalmBusinessmStudies,m42:9m(2011),
1079–
1102mandmJ.mW.mLum andmP.mW.mBeamish,m“Internationalmdiversificationmandmfirmmperformance:mth
emS-curvemhypothesis,”mAcademymofmManagementmJournal,m47:4m(2004),m598–
609.)mDifficulty:mHard
Pg:m22-23m(footnotem15)
Subject:mProcessmofmInternationalization
3
, MultiplemChoice
14. AnmMNEmisma(n):
a. import-exportmcompanymthatmactivelymtradesminmforeignmmarkets.
b. companymthatmpassivelymmanagesmitsmsubstantialmforeignmdirectminvestment.
c. import-exportmcompanymthatmactivelymmanagesmitsmforeignminvestmentmportfolio.
d. companymthatmactivelymmanagesmsubstantialmforeignmdirectminvestment.
ANS:dm(AmtruemMNEmismamcompanymthatmhasmsubstantialmdirectminvestmentminmforeignmcountri
es,mandmthatmactivelymmanagesmandmregardsmitsmforeignmoperationsmasmintegralmpartsmofmthemcom
pany,mbothmstrategicallymandmorganizationally.mCompaniesmthatmeithermdomnotmholdmequitymposi
tionsmormholdmminormequitympositionsminmoverseasmventuresmwithoutmormwithmverymlowmmanage
ment
involvementmmaymbemviewedmasm“international”mcompaniesmbutmwouldmnotmbemregardedmasmmultinati
onalmenterprises.)
Difficulty:mModerate
Pg:m12
m
Subject:mMNEmdefinition
15. Threemprerequisitesmthatmmustmbemsatisfiedmbeforemamnationalmfirmmcanmtransformmitselfmint
omammultinationalmfirmminclude:
a. scale-basedmadvantages,mownership-specificmadvantages,mandmcontractualmcapabilities.
b. location-specificmadvantages,mownership-specificmadvantages,mandmorganizationalmcapabilities.
c. scale-basedmadvantages,mownership-specificmadvantages,mandmorganizationalmcapabilities.
d. location-specificmadvantages,mknowledgemadvantages,mandmorganizationalmcapabilities.
ANS:bm(a,mc,mandmdmaremincorrectmsincemscale-basedmadvantages,mknowledge-
basedmadvantages,mandmcontractualmcapabilitiesmare,mbymthemselves,minsufficientmtomjustifymthem
internationalizationmofmoperations.mWithmmuchmlessmeffortmamcompanymoftenmcanmsellmormlicense
mitstechnologymtomforeignmproducers,mfranchisemitsmbrandmnameminternationally,mormsellmitsmprod
uctsmabroadmthroughmlocalmdistributors,mwithoutmhavingmtomsetmupmitsmownmoffshoremoperations.)
mDifficulty:mModeratemtomhard
Pg:m22
Subject:mPrerequisitesmforminternationalization
16. Whichmofmthemfollowingmcorrectlymdescribesmthemsequentialmevolutionminmmanagementmthinki
ngmwithmrespectmtomthemstrategicmrolemofmforeignmoperationsminmemergingmMNEs?
a. globalmmentality,mmultinationalmmentality,minternationalmmentality,mtransnationalmmentality.
b. internationalmmentality,mglobalmmentality,mtransnationalmmentality,mmultinationalmmentality.
c. multinationalmmentality,mglobalmmentality,minternationalmmentality,mtransnationalmmentality.
d. internationalmmentality,mmultinationalmmentality,mglobalmmentality,mtransnationalmmentality.
ANS:dm(a,mb,mandmcmaremincorrectmsince,malthoughmtheymdescribemthemdifferentmwaysmofmmanagem
entmthinkingmregardingmthemstrategicmrolemofmforeignmoperationsminmemergingmMNEs,mtheydomnotm
describemthemevolutionmofmthismthinkingminmthemcorrectmsequence.)
4
ingmabroad:
Motivations,mmeans,mandmmentalities
True/False
1. ThemlargestmMNEsmaremequivalentminmtheirmeconomicmimportancemtomlessmdevelopedmeconomi
esmsuchmasmNigeria,mMoldova,mormJamaica.
ANS:Falsem(SalesmofmthemlargestmMNEsmexceedmthemGDPsmofmlessmdevelopedmcountrie
s.)mDifficulty:mModerate
Pg:m16mandmTablem1.3m(16)
Subject:mMNEminfluenceminmthemglobalmeconomy
2. Themprocessmofminternationalizationmfollowedmbymmostmfirmsmismusuallymwell-
thoughtmoutminmadvancemandmtypicallymbuildsmonmamcombinationmofmrationalmanalysis,mplan
ningmandmimplementation.
ANS:Falsem(Itmismmoremlikelymamcombinationmofmrationalmanalysis,mopportunism,mandmluck.mInm
regardsmtomopportunism,mseveralmstudiesmhavemfoundmthatmmostmfirmsmbeginmexportingmduemtom
anmunsolicitedmexportmorder.)
Difficulty:mModerate
Pg:m22-23
m
Subject:mThemProcessmofmInternationalization
3. Allmcompaniesminternationalizeminmanmincrementalmmanner.mFirst,mtheymmakemanminitialmco
mmitmentmofmresourcesmtomthemforeignmmarketminmordermtomsecuremlocalmmarketmknowledge.
Buildingmonmthismknowledge,mtheymmakemsubsequentmresourcemcommitments,meventuallyml
m
eadingmtomhighermlevelsmofminvestmentminmthemforeignmmarket.
ANS:Falsem(Theremaremmanymexceptionsmtomthemincrementalmapproach.mSomemfirmsmarem“bor
nmglobals”.mOthermfirmsmretainmthemsamemmode,mincludingmlevelmofmsubsidiaryminvolvement,mi
nmallmforeignmmarkets.)
Difficulty:mModerate
Pg:m23
m
Subject:mThemProcessmofmInternationalization
4. Amjointmventuremismamcontractualmmodemofmforeignmentryminvolvingmamhighmlevelmofmresou
rcemcommitmentmbymallmpartners.
ANS:Falsem(AmJVmwillmnotmtypicallymrequiremasmhighmamresourcemcommitmentmasmwemwouldmse
eminmwhollymownedmsubsidiaries.mInmaddition,mtheremismsignificantmvariabilityminmthemlevelmofmres
ourcesmcontributedmbympartners.)
1
,Difficulty:m ModeratemPg:
24m(Figurem1.2)mSubject:
Foreignmentrymmode
5. Emergingmmotivationsmforminternationalizationmincludemthemdesiremtomenhancemthemfir
m’smcompetitivempositionmandmthemdesiremtomdevelopmglobalmscanningmcapabilities.
ANS:Truem
Difficulty:
ModeratePg:
19-20
Subject:mEmergingmMotivations
6. FormanmMNEmtomexist,mfirstmforeignmcountriesmmustmprovidemlocation-
specificmadvantagesmtomattractmthemcompanymtominvestmthere,msecondmthemcompanymmustmhave
mownership-
specificmadvantagesmthatmcounteractmitsmliabilitymofmforeignness,mthirdmthemcompanymmustmha
vemthemorganizationalmcapabilitymtomleveragemitsmstrategicmadvantagesmmoremeffectivelymintern
allymthanmexternally.
ANS:TruemDifficult
y:mModeratemPg:m22
Subject:mPrerequisitesmforminternationalization
7. AnmMNEmwithmanm‘internationalmmentality’mwillmtypicallymbemmanagedmasmamcoordinat
edmfederation.
ANS:TruemDifficult
y:mModeratemPg:m26
Subject:mThemevolvingmmentality:minternationalmtomtransnational
8. AnmMNEmwithmam‘multinationalmmentality’mwillmtypicallymbemmanagedmasmamcoordinat
edmfederation.
ANS:Falsem(Itmwillmtypicallymbemmanagedmasmamdecentralizedmfederation.)Difficult
y:mModerate
Pg:m26-27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
9. AnmMNEmwithmam‘globalmmentality’mwillmtypicallymmanagemitsmoperationsmcentrally.
2
,ANS:TruemDifficult
y:mModeratemPg:m27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
10. AnmMNEmwithmam‘transnationalmmentality’mwillmtypicallymbemmanagedmasmanmintegratedmnetwork.
ANS:TruemDifficult
y:mModeratemPg:m27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
11. Themcoremadvantagemmultinationalmmentalitymhasmovermglobalmmentalitymismmoremefficie
ntmmanufacturing.
ANS:Falsem(itmismthemothermwaymaround)Difficulty:
Moderatem
Pg:m26-27
Subject:mThemevolvingmmentality:minternationalmtomtransnational
12. RaymondmVernon’smarticlem“Gonemaremthemcashmcowsmofmyesteryear”mhighlightsmamcompan
y’smglobalmscanningmandmlearningmcapability.
ANS:TruemDiffi
culty:mHard
Pgm19m(footnotem10)
Subject:mEmergingmMotivations
13. Onlymonemarticlemfurthermdevelopsmthemideamthatm“themprocessmofmdevelopingmthesemstrategicma
ndmorganizationalmattributesmliesmatmthemheartmofmtheminternationalizationmprocessmthroughmwhi
chmamcompanymbuildsmitsmpositionminmworldmmarkets.
ANS:Falsem(2marticlesmfurthermdevelopmthemidea:mA.mJonssonmandmN.mJ.mFoss,m“Internationalm
expansionmthroughmflexiblemreplication:mlearningmfrommtheminternationalizationmexperiencem
ofmIKEA,”mJournalmofmInternationalmBusinessmStudies,m42:9m(2011),
1079–
1102mandmJ.mW.mLum andmP.mW.mBeamish,m“Internationalmdiversificationmandmfirmmperformance:mth
emS-curvemhypothesis,”mAcademymofmManagementmJournal,m47:4m(2004),m598–
609.)mDifficulty:mHard
Pg:m22-23m(footnotem15)
Subject:mProcessmofmInternationalization
3
, MultiplemChoice
14. AnmMNEmisma(n):
a. import-exportmcompanymthatmactivelymtradesminmforeignmmarkets.
b. companymthatmpassivelymmanagesmitsmsubstantialmforeignmdirectminvestment.
c. import-exportmcompanymthatmactivelymmanagesmitsmforeignminvestmentmportfolio.
d. companymthatmactivelymmanagesmsubstantialmforeignmdirectminvestment.
ANS:dm(AmtruemMNEmismamcompanymthatmhasmsubstantialmdirectminvestmentminmforeignmcountri
es,mandmthatmactivelymmanagesmandmregardsmitsmforeignmoperationsmasmintegralmpartsmofmthemcom
pany,mbothmstrategicallymandmorganizationally.mCompaniesmthatmeithermdomnotmholdmequitymposi
tionsmormholdmminormequitympositionsminmoverseasmventuresmwithoutmormwithmverymlowmmanage
ment
involvementmmaymbemviewedmasm“international”mcompaniesmbutmwouldmnotmbemregardedmasmmultinati
onalmenterprises.)
Difficulty:mModerate
Pg:m12
m
Subject:mMNEmdefinition
15. Threemprerequisitesmthatmmustmbemsatisfiedmbeforemamnationalmfirmmcanmtransformmitselfmint
omammultinationalmfirmminclude:
a. scale-basedmadvantages,mownership-specificmadvantages,mandmcontractualmcapabilities.
b. location-specificmadvantages,mownership-specificmadvantages,mandmorganizationalmcapabilities.
c. scale-basedmadvantages,mownership-specificmadvantages,mandmorganizationalmcapabilities.
d. location-specificmadvantages,mknowledgemadvantages,mandmorganizationalmcapabilities.
ANS:bm(a,mc,mandmdmaremincorrectmsincemscale-basedmadvantages,mknowledge-
basedmadvantages,mandmcontractualmcapabilitiesmare,mbymthemselves,minsufficientmtomjustifymthem
internationalizationmofmoperations.mWithmmuchmlessmeffortmamcompanymoftenmcanmsellmormlicense
mitstechnologymtomforeignmproducers,mfranchisemitsmbrandmnameminternationally,mormsellmitsmprod
uctsmabroadmthroughmlocalmdistributors,mwithoutmhavingmtomsetmupmitsmownmoffshoremoperations.)
mDifficulty:mModeratemtomhard
Pg:m22
Subject:mPrerequisitesmforminternationalization
16. Whichmofmthemfollowingmcorrectlymdescribesmthemsequentialmevolutionminmmanagementmthinki
ngmwithmrespectmtomthemstrategicmrolemofmforeignmoperationsminmemergingmMNEs?
a. globalmmentality,mmultinationalmmentality,minternationalmmentality,mtransnationalmmentality.
b. internationalmmentality,mglobalmmentality,mtransnationalmmentality,mmultinationalmmentality.
c. multinationalmmentality,mglobalmmentality,minternationalmmentality,mtransnationalmmentality.
d. internationalmmentality,mmultinationalmmentality,mglobalmmentality,mtransnationalmmentality.
ANS:dm(a,mb,mandmcmaremincorrectmsince,malthoughmtheymdescribemthemdifferentmwaysmofmmanagem
entmthinkingmregardingmthemstrategicmrolemofmforeignmoperationsminmemergingmMNEs,mtheydomnotm
describemthemevolutionmofmthismthinkingminmthemcorrectmsequence.)
4
