Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
,Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
, Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
Global Business Summary by Sterre Mouws
Chapter 1: Expanding Abroad
The MNE: Definition, Scope and Influence
Definition – A multinational enterprise has a substantial direct investment in foreign
countries, and be engaged in the active management of these offshore assets rather than
simply holding them in a passive investment portfolio.
Scope – In 1973 an MNE was one which controls assets, factories, mines, sales offices,
and the like in two or more countries.
In 1984 an MNE was an enterprise which comprises entities in two ore more countries,
operates under a system of decision making centers, and entities are so linked by
ownership or otherwise that one or more of them may be able to exercise a significant
influence over the activities of others.
The active, coordinated management of operations located in different countries is a key
differentiating characteristic of an MNE.
MNE Influence in the Global Economy – MNE’s have considerable influence on the global
economy, employ a high percentage of business graduates, and pose the most complex
and strategic and organizational challenges for their managers.
The Motivations: Pushes and Pulls to Internationalize
Traditional Motivations – the earliest motivations that drove companies to invest abroad
was the need to secure key supplies.
Another strong trigger could be described as market-seeking behaviour (firms with some
intrinsic advantage).
Important trigger for internationalisation was the desire to access low-cost factors of
production. The ways in which thse motives interacted to push companies to become
MNEs are captured in the
cycle theory – which suggests that the starting point for internationalization process is
typically an innovation that a company creates in its home country. First phase firms
typically establish an export unit within the home office to oversee the growing export
levels. As the product matures and production processes become standardized, the
company enters the second stage, the firm typically sets up production facilities in the
importing countries. Finally, in the third stage, the product becomes highly standardized,
and many competitors enter the business, competition focuses on price and therefore on
cost.
Emerging Motivations – Secondary set of motivations that underlay their emerging global strategies.
Increasing scale economies, ballooning R&D investments and shortening product life
cycles that transferred many industries into global rather than national structures and
made a worldwide scope of activities not a matter of choice, but an essential prerequisite
for companies to survive. Global scanning and learning capability, a huge informational
advantage that could result in its location more efficient sources. Competitive positioning
also leverage that foreign investments provided over competitors.
The Means of Internationalization: Prerequisites and Processes
Prerequisites for Internationalization – There are three conditions that must be me for
the existence of an MNE. There must be foreign countries that offer certain local-specific
advantages to provide the requisite motivation for the company to invest there.
The company must have some strategic competencies or ownership-specific advantages
to counteract the disadvantages of its relative unfamiliarity with foreign markets.
It must possess some organizational capabilities to achieve better returns from
leveraging it strategic strengths internally, rather than through external market
mechanisms such as contracts or licences.
, Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
Process of Internationalization – Learning model of internationalization (Uppsala model)
– The company makes an initial commitment of resources to the foreign market, and
through this investment, it gains local market knowledge about its customers,
competitors and regulatory conditions. On the basis of this market knowledge, the
company is able to evaluate its current activities, the extent of its commitment to the
market, and thus its opportunities for additional investments. It then makes a subsequent
resource commitment, which allows it develop additional market knowledge.
Approaches to Foreign Market Entry – Based on amount of resources committed to foreign
market (horizontal) and level of control over foreign activities (vertical.
The Evolving Mentality: International to Transnational
International Mentality – Earliest stage of internationalization. Derives directly from the
international product cycle theory. Products are developed for the domestic market and
only subsequently sold abroad; technology and other sources of knowledge are
transferred from the parent company to the overseas operator; and offshore
manufacturing represents a means to protect the company’s home market.
Multinational Mentality – develops as managers begin to recognize and emphasize the
differences among national markets and operating environments. Adopt a more flexible
approach to their international operations by modifying their products, strategies and
even management practices country by country. Considerably independent from
headquarters.
Global Mentality – views the world as its basic unit of analysis. The underlying
assumption that national tastes and preferences are more similar than different, or can be
made more similar by providing customers with standardized products at adequate costs
and with quality advantages over those national varieties that they know.
Transnational Mentality – an approach to worldwide management. Key activities and
resources are neither centralized in the parent company nor so decentralized that each
subsidiary can carry out it own tasks on a local-for-local basis. The resources and
activities are dispersed but specialized, to achieve efficiency and flexibility at the same
time. These dispersed resources are integrated into an interdependent network of
worldwide operations.
Reading 1 – 2 Distance Still Matters: The Hard Reality of Global
Expansion Distance between two countries can manifest itself along four
basic dimensions: cultural, administrative, geographic, and economic.
Cultural Distance – a country’s cultural attributes determine how people interact with
one another and with companies and institutions. Most often, cultural attributes create
distance by influencing the choices that consumers make between substitute products
because of their preferences for specific features. Sometimes products can touch a deeper
nerve, triggering associations related to the consumer’s identity as a member of a
particular community.
Administrative or Political Distance – historical and political associations between
shared by countries greatly affect trade between them. Preferential trading arrangements,
common currency, and political union can also increase trade by more than 300 % each.
Countries can also create administrative and political distance through unilateral
measures. Protect domestic markets if the domestic company is either; a large employer,
seen as national champion, vital to national security, produces staples, produces and
entitlement good or service, exploits natural resources, involves high sunk-cost
commitments.
Geographic Distance – not simply a matter of how far away the country is in miles or
kilometres. Physical size of the country, average within-country distance, access to
waterways and the ocean, and topography. Also transportation and communication
infrastructure. Products with low value-to-weight or bulk ratios high costs as geographic
distance increases. Fragile of perishable products become significant across large
,Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
, Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
Global Business Summary by Sterre Mouws
Chapter 1: Expanding Abroad
The MNE: Definition, Scope and Influence
Definition – A multinational enterprise has a substantial direct investment in foreign
countries, and be engaged in the active management of these offshore assets rather than
simply holding them in a passive investment portfolio.
Scope – In 1973 an MNE was one which controls assets, factories, mines, sales offices,
and the like in two or more countries.
In 1984 an MNE was an enterprise which comprises entities in two ore more countries,
operates under a system of decision making centers, and entities are so linked by
ownership or otherwise that one or more of them may be able to exercise a significant
influence over the activities of others.
The active, coordinated management of operations located in different countries is a key
differentiating characteristic of an MNE.
MNE Influence in the Global Economy – MNE’s have considerable influence on the global
economy, employ a high percentage of business graduates, and pose the most complex
and strategic and organizational challenges for their managers.
The Motivations: Pushes and Pulls to Internationalize
Traditional Motivations – the earliest motivations that drove companies to invest abroad
was the need to secure key supplies.
Another strong trigger could be described as market-seeking behaviour (firms with some
intrinsic advantage).
Important trigger for internationalisation was the desire to access low-cost factors of
production. The ways in which thse motives interacted to push companies to become
MNEs are captured in the
cycle theory – which suggests that the starting point for internationalization process is
typically an innovation that a company creates in its home country. First phase firms
typically establish an export unit within the home office to oversee the growing export
levels. As the product matures and production processes become standardized, the
company enters the second stage, the firm typically sets up production facilities in the
importing countries. Finally, in the third stage, the product becomes highly standardized,
and many competitors enter the business, competition focuses on price and therefore on
cost.
Emerging Motivations – Secondary set of motivations that underlay their emerging global strategies.
Increasing scale economies, ballooning R&D investments and shortening product life
cycles that transferred many industries into global rather than national structures and
made a worldwide scope of activities not a matter of choice, but an essential prerequisite
for companies to survive. Global scanning and learning capability, a huge informational
advantage that could result in its location more efficient sources. Competitive positioning
also leverage that foreign investments provided over competitors.
The Means of Internationalization: Prerequisites and Processes
Prerequisites for Internationalization – There are three conditions that must be me for
the existence of an MNE. There must be foreign countries that offer certain local-specific
advantages to provide the requisite motivation for the company to invest there.
The company must have some strategic competencies or ownership-specific advantages
to counteract the disadvantages of its relative unfamiliarity with foreign markets.
It must possess some organizational capabilities to achieve better returns from
leveraging it strategic strengths internally, rather than through external market
mechanisms such as contracts or licences.
, Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam
Process of Internationalization – Learning model of internationalization (Uppsala model)
– The company makes an initial commitment of resources to the foreign market, and
through this investment, it gains local market knowledge about its customers,
competitors and regulatory conditions. On the basis of this market knowledge, the
company is able to evaluate its current activities, the extent of its commitment to the
market, and thus its opportunities for additional investments. It then makes a subsequent
resource commitment, which allows it develop additional market knowledge.
Approaches to Foreign Market Entry – Based on amount of resources committed to foreign
market (horizontal) and level of control over foreign activities (vertical.
The Evolving Mentality: International to Transnational
International Mentality – Earliest stage of internationalization. Derives directly from the
international product cycle theory. Products are developed for the domestic market and
only subsequently sold abroad; technology and other sources of knowledge are
transferred from the parent company to the overseas operator; and offshore
manufacturing represents a means to protect the company’s home market.
Multinational Mentality – develops as managers begin to recognize and emphasize the
differences among national markets and operating environments. Adopt a more flexible
approach to their international operations by modifying their products, strategies and
even management practices country by country. Considerably independent from
headquarters.
Global Mentality – views the world as its basic unit of analysis. The underlying
assumption that national tastes and preferences are more similar than different, or can be
made more similar by providing customers with standardized products at adequate costs
and with quality advantages over those national varieties that they know.
Transnational Mentality – an approach to worldwide management. Key activities and
resources are neither centralized in the parent company nor so decentralized that each
subsidiary can carry out it own tasks on a local-for-local basis. The resources and
activities are dispersed but specialized, to achieve efficiency and flexibility at the same
time. These dispersed resources are integrated into an interdependent network of
worldwide operations.
Reading 1 – 2 Distance Still Matters: The Hard Reality of Global
Expansion Distance between two countries can manifest itself along four
basic dimensions: cultural, administrative, geographic, and economic.
Cultural Distance – a country’s cultural attributes determine how people interact with
one another and with companies and institutions. Most often, cultural attributes create
distance by influencing the choices that consumers make between substitute products
because of their preferences for specific features. Sometimes products can touch a deeper
nerve, triggering associations related to the consumer’s identity as a member of a
particular community.
Administrative or Political Distance – historical and political associations between
shared by countries greatly affect trade between them. Preferential trading arrangements,
common currency, and political union can also increase trade by more than 300 % each.
Countries can also create administrative and political distance through unilateral
measures. Protect domestic markets if the domestic company is either; a large employer,
seen as national champion, vital to national security, produces staples, produces and
entitlement good or service, exploits natural resources, involves high sunk-cost
commitments.
Geographic Distance – not simply a matter of how far away the country is in miles or
kilometres. Physical size of the country, average within-country distance, access to
waterways and the ocean, and topography. Also transportation and communication
infrastructure. Products with low value-to-weight or bulk ratios high costs as geographic
distance increases. Fragile of perishable products become significant across large
