GMS 522 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS COMPLETE
STUDY GUIDE
●● Mode of Entry
Answer: central to the process of internationalization is the selection of
an entry mode. These range from low commitment modes such as
exporting high commitment modes such as foreign direct investment
●● Motivation
Answer: the motivation for internationalization may either be proactive
(firm wants to) or reactive (firm has little choice)
●● Uppsala or U model
Answer: the firm first expands to a psychically close market and having
become familiar with that market, will target slightly more distant
markets. experiential knowledge is the major driver of its pattern of
internationalization. The Uppsala model has been criticized for its linear
approach to the internationalization process
●● Dunnings OLI framework
Answer: firms expand abroad to capitalize on ownership, location and
internalization advantages
,●● Advantages of Dunnings OLI framework
Answer: -ownership of foreign assets will confer on the firm a
competitive advantage in the foreign market which is not enjoyed by
competing firms that do not own such assets
-location confers advantages in terms of tax or other investment
incentives offered by the gov't of the host country or a more favorable
industrial relations climate for the firm's operations
-internalization of firm-specific advantages such as proprietary
technology confers benefits to the firm over alternatives such as
licensing
●● Springboard or latecomer perspective
Answer: emerging market firms internationalize in order to overcome
limitations inherent in their home-country environment, such as small
market size, institutional immaturity or a relatively unsophisticated
consumer base. To accomplish this firms aggressively acquire strategic
assets from MNCs in developed countries
●● Systematic four-step process
Answer: 1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
●● Macro Segmentation
,Answer: -develop segmentation criteria
-apply to group countries
●● Preliminary screening
Answer: -develop additional criteria
-apply to reduce the # of candidate countries
●● Secondary screening
Answer: -firm assesses its own capabilities relative to the market
●● Final security selection
Answer: -conduct site visit
●● Selecting Foreign Markets
Answer: the end result of the process is the selection of one country
from the universe of potential candidates by a process of elimination
●● International consumer segmentation
Answer: consumers in cross-national segments may have more in
common with their counterparts in other countries than they do with
citizen of their own countries. If this is the case a two-stage model may
be appropriate in which segmentation is undertaken at both the country
and consumer levels
, ●● Country Level Screening
Answer: macro-segmentation based on overall market attractiveness
●● Consumer level screening
Answer: micro-segmentation based on personal and societal values
●● Types of Entry modes
Answer: -export
-intermediate
-hierarchical
●● Export Modes
Answer: low risk-low return modes which provide limited control for
the exporting firm
●● Intermediate Modes
Answer: modes which provide for the sharing of the risks and rewards of
market entry commensurate with the share of ownership of each partner
●● Hierarchical Modes
Answer: modes in which firm has complete control of the operation but
also exposure to a higher level of risk
AND CORRECT ANSWERS COMPLETE
STUDY GUIDE
●● Mode of Entry
Answer: central to the process of internationalization is the selection of
an entry mode. These range from low commitment modes such as
exporting high commitment modes such as foreign direct investment
●● Motivation
Answer: the motivation for internationalization may either be proactive
(firm wants to) or reactive (firm has little choice)
●● Uppsala or U model
Answer: the firm first expands to a psychically close market and having
become familiar with that market, will target slightly more distant
markets. experiential knowledge is the major driver of its pattern of
internationalization. The Uppsala model has been criticized for its linear
approach to the internationalization process
●● Dunnings OLI framework
Answer: firms expand abroad to capitalize on ownership, location and
internalization advantages
,●● Advantages of Dunnings OLI framework
Answer: -ownership of foreign assets will confer on the firm a
competitive advantage in the foreign market which is not enjoyed by
competing firms that do not own such assets
-location confers advantages in terms of tax or other investment
incentives offered by the gov't of the host country or a more favorable
industrial relations climate for the firm's operations
-internalization of firm-specific advantages such as proprietary
technology confers benefits to the firm over alternatives such as
licensing
●● Springboard or latecomer perspective
Answer: emerging market firms internationalize in order to overcome
limitations inherent in their home-country environment, such as small
market size, institutional immaturity or a relatively unsophisticated
consumer base. To accomplish this firms aggressively acquire strategic
assets from MNCs in developed countries
●● Systematic four-step process
Answer: 1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
●● Macro Segmentation
,Answer: -develop segmentation criteria
-apply to group countries
●● Preliminary screening
Answer: -develop additional criteria
-apply to reduce the # of candidate countries
●● Secondary screening
Answer: -firm assesses its own capabilities relative to the market
●● Final security selection
Answer: -conduct site visit
●● Selecting Foreign Markets
Answer: the end result of the process is the selection of one country
from the universe of potential candidates by a process of elimination
●● International consumer segmentation
Answer: consumers in cross-national segments may have more in
common with their counterparts in other countries than they do with
citizen of their own countries. If this is the case a two-stage model may
be appropriate in which segmentation is undertaken at both the country
and consumer levels
, ●● Country Level Screening
Answer: macro-segmentation based on overall market attractiveness
●● Consumer level screening
Answer: micro-segmentation based on personal and societal values
●● Types of Entry modes
Answer: -export
-intermediate
-hierarchical
●● Export Modes
Answer: low risk-low return modes which provide limited control for
the exporting firm
●● Intermediate Modes
Answer: modes which provide for the sharing of the risks and rewards of
market entry commensurate with the share of ownership of each partner
●● Hierarchical Modes
Answer: modes in which firm has complete control of the operation but
also exposure to a higher level of risk
