Globalization Test Questions

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Chapter 1
Expanding abroad:
Motivations, means, and mentalities

True/False

1. The largest MNEs are equivalent in their economic importance to less developed economies such as Tanzania, Estonia or Sri Lanka.

Answer: False (Sales of the largest MNEs exceed the GDPs of less developed countries.) Difficulty: Easy
Page: 4 and Table 1-1 on page 3
Topic: MNE scope and influence

2. The process of internationalization followed by most firms is usually well-thought out in advance and typically builds on a combination of rational analysis, planning and implementation.

Answer: False (It is more likely a combination of rational analysis, opportunism, and luck. In regards to opportunism, several studies have found that most firms begin exporting due to an unsolicited export order.) Difficulty: Moderate

Page: 9
Topic: Internationalization process

3. A joint venture is a contractual mode of foreign entry involving a high level of resource commitment by all partners.

Answer: False (A JV will not typically require as high a resource commitment as we would see in wholly owned subsidiaries. In addition, there is significant variability in the level of resources contributed by partners.) Difficulty: Moderate

Page: 10
Topic: Foreign entry mode

4. Emerging motivations for internationalization include the desire to enhance the firm’s competitive position and the desire to develop global scanning capabilities.

Answer: True
Difficulty: Easy
Page: 6-7 and ppt slide 1-6
Topic: Motivations for internationalization

5. For an MNE to exist, first foreign countries must provide location-specific advantages to attract the company to invest there, second the company must have ownership-specific advantages that counteract its liability of foreignness, third the company must have the organizational capability to leverage its strategic advantages more effectively internally than externally.

Answer: True
Difficulty: Moderate
Page: 7-8
Topic: Prerequisites for internationalization

6. An MNE with a ‘multinational perspective’ will typically be managed as a coordinated federation.

Answer: False (It will typically be managed as a decentralized federation.) Difficulty: Moderate
Page: 11-12 and ppt slide 1-13
Topic: The evolving mentality: international to transnational

7. An MNE with a ‘global perspective’ will typically manage its operations centrally.

Answer: True
Difficulty: Moderate
Page: 12-13 and ppt slide 1-13
Topic: The evolving mentality: international to transnational

8. An MNE with a ‘transnational perspective’ will typically be managed as an integrated network.

Answer: True
Difficulty: Moderate
Page: 13-14 and ppt slide 1-13
Topic: The evolving mentality: international to transnational

Multiple Choice

9. Which of the following correctly describes the sequential evolution in management thinking with respect to the strategic role of foreign operations in emerging MNEs? a. global mentality, multinational mentality, international mentality, transnational mentality. b. international mentality, global mentality, transnational mentality, multinational mentality. c. multinational mentality, global mentality, international mentality, transnational mentality. d. international mentality, multinational mentality, global mentality, transnational mentality.

Answer: d (a, b, and c are incorrect because, although they describe the different ways of management thinking regarding the strategic role of foreign operations in emerging MNEs, they do not describe the evolution of this thinking in the correct sequence.) Difficulty: Moderate

Page: 11-14
Topic: Evolving mentality toward strategic role of foreign operations

10. A franchise, such as McDonald’s, is a _________ mode of foreign entry. a. low commitment, low control
b. low commitment, moderate control
c. low commitment, high control
d. moderate commitment, moderate control

Answer: b (a, c, and d would describe...
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