Chapterg1gExpandi
nggabroad:
Motivations,gmeans,gandgmentalities
True/False
1. TheglargestgMNEsgaregequivalentgingtheirgeconomicgimportancegtoglessgdevelopedgeconomie
sgsuchgasgNigeria,gMoldova,gorgJamaica.
ANS:Falseg(SalesgofgtheglargestgMNEsgexceedgthegGDPsgofglessgdevelopedgcountries.)gDifficu
lty:gModerate
Pg:g16gandgTableg1.3g(16)
Subject:gMNEginfluencegingthegglobalgeconomy
2. Thegprocessgofginternationalizationgfollowedgbygmostgfirmsgisgusuallygwell-
thoughtgoutgingadvancegandgtypicallygbuildsgongagcombinationgofgrationalganalysis,gplan
ninggandgimplementation.
ANS:Falseg(Itgisgmoreglikelygagcombinationgofgrationalganalysis,gopportunism,gandgluck.gIngr
egardsgtogopportunism,gseveralgstudiesghavegfoundgthatgmostgfirmsgbegingexportinggduegtoga
ngunsolicitedgexportgorder.)
Difficulty:gModerate
gPg:g22-23
Subject:gThegProcessgofgInternationalization
3. Allgcompaniesginternationalizegingangincrementalgmanner.gFirst,gtheygmakeganginitialgcom
mitmentgofgresourcesgtogthegforeigngmarketgingordergtogsecureglocalgmarketgknowledge.gB
uildinggongthisgknowledge,gtheygmakegsubsequentgresourcegcommitments,geventuallyglead
inggtoghigherglevelsgofginvestmentgingthegforeigngmarket.
ANS:Falseg(Theregaregmanygexceptionsgtogthegincrementalgapproach.gSomegfirmsgareg“borngg
lobals”.gOthergfirmsgretaingthegsamegmode,gincludingglevelgofgsubsidiaryginvolvement,gingallgf
oreigngmarkets.)
Difficulty:gModerate
gPg:g23
Subject:gThegProcessgofgInternationalization
4. Agjointgventuregisgagcontractualgmodegofgforeigngentryginvolvinggaghighglevelgofgresourc
egcommitmentgbygallgpartners.
ANS:Falseg(AgJVgwillgnotgtypicallygrequiregasghighgagresourcegcommitmentgasgwegwouldgseegi
ngwhollygownedgsubsidiaries.gIngaddition,gtheregisgsignificantgvariabilitygingtheglevelgofgresour
cesgcontributedgbygpartners.)
1
,Difficulty:g ModerategPg:
24g(Figureg1.2)gSubject:
Foreigngentrygmode
5. Emerginggmotivationsgforginternationalizationgincludegthegdesiregtogenhancegthegfirm’
sgcompetitivegpositiongandgthegdesiregtogdevelopgglobalgscanninggcapabilities.
ANS:TruegDiffi
culty:
ModeratePg:
19-20
Subject:gEmerginggMotivations
6. ForgangMNEgtogexist,gfirstgforeigngcountriesgmustgprovideglocation-
specificgadvantagesgtogattractgthegcompanygtoginvestgthere,gsecondgthegcompanygmustghaveg
ownership-
specificgadvantagesgthatgcounteractgitsgliabilitygofgforeignness,gthirdgthegcompanygmustghav
egthegorganizationalgcapabilitygtogleveragegitsgstrategicgadvantagesgmoregeffectivelyginternal
lygthangexternally.
ANS:TruegDifficulty
:gModerategPg:g22
Subject:gPrerequisitesgforginternationalization
7. AngMNEgwithgang‘internationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinate
dgfederation.
ANS:TruegDifficulty
:gModerategPg:g26
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
8. AngMNEgwithgag‘multinationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinate
dgfederation.
ANS:Falseg(Itgwillgtypicallygbegmanagedgasgagdecentralizedgfederation.)Difficulty:gModer
ate
Pg:g26-27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
9. AngMNEgwithgag‘globalgmentality’gwillgtypicallygmanagegitsgoperationsgcentrally.
2
,ANS:TruegDifficulty
:gModerategPg:g27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
10. AngMNEgwithgag‘transnationalgmentality’gwillgtypicallygbegmanagedgasgangintegratedgnetwork.
ANS:TruegDifficulty
:gModerategPg:g27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
11. Thegcoregadvantagegmultinationalgmentalityghasgovergglobalgmentalitygisgmoregefficie
ntgmanufacturing.
ANS:Falseg(itgisgthegothergwaygaround)Difficulty:
Moderate
gPg:g26-
27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
12. RaymondgVernon’sgarticleg“Gonegaregthegcashgcowsgofgyesteryear”ghighlightsgagcompany’
sgglobalgscanninggandglearninggcapability.
ANS:TruegDiffi
culty:gHard
Pgg19g(footnoteg10)
Subject:gEmerginggMotivations
13. Onlygonegarticlegfurthergdevelopsgthegideagthatg“thegprocessgofgdevelopinggthesegstrategicgan
dgorganizationalgattributesgliesgatgthegheartgofgtheginternationalizationgprocessgthroughgwhic
hgagcompanygbuildsgitsgpositiongingworldgmarkets.
ANS:Falseg(2garticlesgfurthergdevelopgthegidea:gA.gJonssongandgN.gJ.gFoss,g“Internationalge
xpansiongthroughgflexiblegreplication:glearninggfromgtheginternationalizationgexperiencegof
gIKEA,”gJournalgofgInternationalgBusinessgStudies,g42:9g(2011),
1079–
1102gandgJ.gW.gLugandgP.gW.gBeamish,g“Internationalgdiversificationgandgfirmg performance:gthe
gS-curveghypothesis,”gAcademygofgManagementgJournal,g47:4g(2004),g598–
609.)gDifficulty:gHard
Pg:g22-23g(footnoteg15)
Subject:gProcessgofgInternationalization
3
, MultiplegChoice
14. AngMNEgisga(n):
a. import-exportgcompanygthatgactivelygtradesgingforeigngmarkets.
b. companygthatgpassivelygmanagesgitsgsubstantialgforeigngdirectginvestment.
c. import-exportgcompanygthatgactivelygmanagesgitsgforeignginvestmentgportfolio.
d. companygthatgactivelygmanagesgsubstantialgforeigngdirectginvestment.
ANS:dg(AgtruegMNEgisgagcompanygthatghasgsubstantialgdirectginvestmentgingforeigngcountrie
s,gandgthatgactivelygmanagesgandgregardsgitsgforeigngoperationsgasgintegralgpartsgofgthegcomp
any,gbothgstrategicallygandgorganizationally.gCompaniesgthatgeithergdognotgholdgequitygpositi
onsgorgholdgminorgequitygpositionsgingoverseasgventuresgwithoutgorgwithgveryglowgmanagem
ent
involvementgmaygbegviewedgasg“international”gcompaniesgbutgwouldgnotgbegregardedgasgmult
inationalgenterprises.)
Difficulty:gModerate
gPg:g12
Subject:gMNEgdefinition
15. Threegprerequisitesgthatgmustgbegsatisfiedgbeforegagnationalgfirmgcangtransformgitselfgintog
agmultinationalgfirmginclude:
a. scale-basedgadvantages,gownership-specificgadvantages,gandgcontractualgcapabilities.
b. location-specificgadvantages,gownership-specificgadvantages,gandgorganizationalgcapabilities.
c. scale-basedgadvantages,gownership-specificgadvantages,gandgorganizationalgcapabilities.
d. location-specificgadvantages,gknowledgegadvantages,gandgorganizationalgcapabilities.
ANS:bg(a,gc,gandgdgaregincorrectgsincegscale-basedgadvantages,gknowledge-
basedgadvantages,gandgcontractualgcapabilitiesgare,gbygthemselves,ginsufficientgtogjustifygthegi
nternationalizationgofgoperations.gWithgmuchglessgeffortgagcompanygoftengcangsellgorglicensegi
tstechnologygtogforeigngproducers,gfranchisegitsgbrandgnameginternationally,gorgsellgitsgproduct
sgabroadgthroughglocalgdistributors,gwithoutghavinggtogsetgupgitsgowngoffshoregoperations.)gDi
fficulty:gModerategtoghard
Pg:g22
Subject:gPrerequisitesgforginternationalization
16. Whichgofgthegfollowinggcorrectlygdescribesgthegsequentialgevolutiongingmanagementgthinkin
ggwithgrespectgtogthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs?
a. globalgmentality,gmultinationalgmentality,ginternationalgmentality,gtransnationalgmentality.
b. internationalgmentality,gglobalgmentality,gtransnationalgmentality,gmultinationalgmentality.
c. multinationalgmentality,gglobalgmentality,ginternationalgmentality,gtransnationalgmentality.
d. internationalgmentality,gmultinationalgmentality,gglobalgmentality,gtransnationalgmentality.
ANS:dg(a,gb,gandgcgaregincorrectgsince,galthoughgtheygdescribegthegdifferentgwaysgofgmanagemen
tgthinkinggregardinggthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs,gtheydognotgdes
cribegthegevolutiongofgthisgthinkinggingthegcorrectgsequence.)
4
nggabroad:
Motivations,gmeans,gandgmentalities
True/False
1. TheglargestgMNEsgaregequivalentgingtheirgeconomicgimportancegtoglessgdevelopedgeconomie
sgsuchgasgNigeria,gMoldova,gorgJamaica.
ANS:Falseg(SalesgofgtheglargestgMNEsgexceedgthegGDPsgofglessgdevelopedgcountries.)gDifficu
lty:gModerate
Pg:g16gandgTableg1.3g(16)
Subject:gMNEginfluencegingthegglobalgeconomy
2. Thegprocessgofginternationalizationgfollowedgbygmostgfirmsgisgusuallygwell-
thoughtgoutgingadvancegandgtypicallygbuildsgongagcombinationgofgrationalganalysis,gplan
ninggandgimplementation.
ANS:Falseg(Itgisgmoreglikelygagcombinationgofgrationalganalysis,gopportunism,gandgluck.gIngr
egardsgtogopportunism,gseveralgstudiesghavegfoundgthatgmostgfirmsgbegingexportinggduegtoga
ngunsolicitedgexportgorder.)
Difficulty:gModerate
gPg:g22-23
Subject:gThegProcessgofgInternationalization
3. Allgcompaniesginternationalizegingangincrementalgmanner.gFirst,gtheygmakeganginitialgcom
mitmentgofgresourcesgtogthegforeigngmarketgingordergtogsecureglocalgmarketgknowledge.gB
uildinggongthisgknowledge,gtheygmakegsubsequentgresourcegcommitments,geventuallyglead
inggtoghigherglevelsgofginvestmentgingthegforeigngmarket.
ANS:Falseg(Theregaregmanygexceptionsgtogthegincrementalgapproach.gSomegfirmsgareg“borngg
lobals”.gOthergfirmsgretaingthegsamegmode,gincludingglevelgofgsubsidiaryginvolvement,gingallgf
oreigngmarkets.)
Difficulty:gModerate
gPg:g23
Subject:gThegProcessgofgInternationalization
4. Agjointgventuregisgagcontractualgmodegofgforeigngentryginvolvinggaghighglevelgofgresourc
egcommitmentgbygallgpartners.
ANS:Falseg(AgJVgwillgnotgtypicallygrequiregasghighgagresourcegcommitmentgasgwegwouldgseegi
ngwhollygownedgsubsidiaries.gIngaddition,gtheregisgsignificantgvariabilitygingtheglevelgofgresour
cesgcontributedgbygpartners.)
1
,Difficulty:g ModerategPg:
24g(Figureg1.2)gSubject:
Foreigngentrygmode
5. Emerginggmotivationsgforginternationalizationgincludegthegdesiregtogenhancegthegfirm’
sgcompetitivegpositiongandgthegdesiregtogdevelopgglobalgscanninggcapabilities.
ANS:TruegDiffi
culty:
ModeratePg:
19-20
Subject:gEmerginggMotivations
6. ForgangMNEgtogexist,gfirstgforeigngcountriesgmustgprovideglocation-
specificgadvantagesgtogattractgthegcompanygtoginvestgthere,gsecondgthegcompanygmustghaveg
ownership-
specificgadvantagesgthatgcounteractgitsgliabilitygofgforeignness,gthirdgthegcompanygmustghav
egthegorganizationalgcapabilitygtogleveragegitsgstrategicgadvantagesgmoregeffectivelyginternal
lygthangexternally.
ANS:TruegDifficulty
:gModerategPg:g22
Subject:gPrerequisitesgforginternationalization
7. AngMNEgwithgang‘internationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinate
dgfederation.
ANS:TruegDifficulty
:gModerategPg:g26
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
8. AngMNEgwithgag‘multinationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinate
dgfederation.
ANS:Falseg(Itgwillgtypicallygbegmanagedgasgagdecentralizedgfederation.)Difficulty:gModer
ate
Pg:g26-27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
9. AngMNEgwithgag‘globalgmentality’gwillgtypicallygmanagegitsgoperationsgcentrally.
2
,ANS:TruegDifficulty
:gModerategPg:g27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
10. AngMNEgwithgag‘transnationalgmentality’gwillgtypicallygbegmanagedgasgangintegratedgnetwork.
ANS:TruegDifficulty
:gModerategPg:g27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
11. Thegcoregadvantagegmultinationalgmentalityghasgovergglobalgmentalitygisgmoregefficie
ntgmanufacturing.
ANS:Falseg(itgisgthegothergwaygaround)Difficulty:
Moderate
gPg:g26-
27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
12. RaymondgVernon’sgarticleg“Gonegaregthegcashgcowsgofgyesteryear”ghighlightsgagcompany’
sgglobalgscanninggandglearninggcapability.
ANS:TruegDiffi
culty:gHard
Pgg19g(footnoteg10)
Subject:gEmerginggMotivations
13. Onlygonegarticlegfurthergdevelopsgthegideagthatg“thegprocessgofgdevelopinggthesegstrategicgan
dgorganizationalgattributesgliesgatgthegheartgofgtheginternationalizationgprocessgthroughgwhic
hgagcompanygbuildsgitsgpositiongingworldgmarkets.
ANS:Falseg(2garticlesgfurthergdevelopgthegidea:gA.gJonssongandgN.gJ.gFoss,g“Internationalge
xpansiongthroughgflexiblegreplication:glearninggfromgtheginternationalizationgexperiencegof
gIKEA,”gJournalgofgInternationalgBusinessgStudies,g42:9g(2011),
1079–
1102gandgJ.gW.gLugandgP.gW.gBeamish,g“Internationalgdiversificationgandgfirmg performance:gthe
gS-curveghypothesis,”gAcademygofgManagementgJournal,g47:4g(2004),g598–
609.)gDifficulty:gHard
Pg:g22-23g(footnoteg15)
Subject:gProcessgofgInternationalization
3
, MultiplegChoice
14. AngMNEgisga(n):
a. import-exportgcompanygthatgactivelygtradesgingforeigngmarkets.
b. companygthatgpassivelygmanagesgitsgsubstantialgforeigngdirectginvestment.
c. import-exportgcompanygthatgactivelygmanagesgitsgforeignginvestmentgportfolio.
d. companygthatgactivelygmanagesgsubstantialgforeigngdirectginvestment.
ANS:dg(AgtruegMNEgisgagcompanygthatghasgsubstantialgdirectginvestmentgingforeigngcountrie
s,gandgthatgactivelygmanagesgandgregardsgitsgforeigngoperationsgasgintegralgpartsgofgthegcomp
any,gbothgstrategicallygandgorganizationally.gCompaniesgthatgeithergdognotgholdgequitygpositi
onsgorgholdgminorgequitygpositionsgingoverseasgventuresgwithoutgorgwithgveryglowgmanagem
ent
involvementgmaygbegviewedgasg“international”gcompaniesgbutgwouldgnotgbegregardedgasgmult
inationalgenterprises.)
Difficulty:gModerate
gPg:g12
Subject:gMNEgdefinition
15. Threegprerequisitesgthatgmustgbegsatisfiedgbeforegagnationalgfirmgcangtransformgitselfgintog
agmultinationalgfirmginclude:
a. scale-basedgadvantages,gownership-specificgadvantages,gandgcontractualgcapabilities.
b. location-specificgadvantages,gownership-specificgadvantages,gandgorganizationalgcapabilities.
c. scale-basedgadvantages,gownership-specificgadvantages,gandgorganizationalgcapabilities.
d. location-specificgadvantages,gknowledgegadvantages,gandgorganizationalgcapabilities.
ANS:bg(a,gc,gandgdgaregincorrectgsincegscale-basedgadvantages,gknowledge-
basedgadvantages,gandgcontractualgcapabilitiesgare,gbygthemselves,ginsufficientgtogjustifygthegi
nternationalizationgofgoperations.gWithgmuchglessgeffortgagcompanygoftengcangsellgorglicensegi
tstechnologygtogforeigngproducers,gfranchisegitsgbrandgnameginternationally,gorgsellgitsgproduct
sgabroadgthroughglocalgdistributors,gwithoutghavinggtogsetgupgitsgowngoffshoregoperations.)gDi
fficulty:gModerategtoghard
Pg:g22
Subject:gPrerequisitesgforginternationalization
16. Whichgofgthegfollowinggcorrectlygdescribesgthegsequentialgevolutiongingmanagementgthinkin
ggwithgrespectgtogthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs?
a. globalgmentality,gmultinationalgmentality,ginternationalgmentality,gtransnationalgmentality.
b. internationalgmentality,gglobalgmentality,gtransnationalgmentality,gmultinationalgmentality.
c. multinationalgmentality,gglobalgmentality,ginternationalgmentality,gtransnationalgmentality.
d. internationalgmentality,gmultinationalgmentality,gglobalgmentality,gtransnationalgmentality.
ANS:dg(a,gb,gandgcgaregincorrectgsince,galthoughgtheygdescribegthegdifferentgwaysgofgmanagemen
tgthinkinggregardinggthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs,gtheydognotgdes
cribegthegevolutiongofgthisgthinkinggingthegcorrectgsequence.)
4
