Mid Term Exam

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Compare and contrast the traditional motivations for internationalization with the emerging motivations.

Traditional motivations for internationalization were the starting point of expansion. The original mental outlook of foreign operations was that they needed to merely be strategic and organized extensions of the domestic business; therefore, traditional motivations reflected that perspective. For example, one of the initial, traditional motivations was the need to secure key supplies. If a company’s resources were domestically scarce and/or costly, the motivation to expend to a country where the resources needed were widespread became a priority. In addition, companies developed a market-seeking behavior that brought about internationalization. Emerging motivations for internationalization differed in that they initiated a more integrated, worldwide perspective, which brought about strategies that were more global oriented. For example, it was now essential for companies to increase their scale economies, R&D investments, and shorten the life cycle of their products in order to become and/or stay a competitive, global business. In addition, internationalized companies required the motivation and capability to scan and learn from their global environment. This could expose a company to new market needs and increase product development, which would place them at a competitive advantage.

Identify and briefly describe the 3 “conflicting” forces to which a transnational MNE must respond simultaneously.

One of the three conflicting forces to which a transnational MNE must respond to is cross-market integration. This type of integration was brought about by the internationalization of industries due to economic, technological, and competitive factors. For example, economies of scale and scope were two important economic factors that advanced the process on cross-market integration. Companies were able to use this to reduce the cost of production and...
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