IBUS 301 FINAL EXAM
QUESTIONS & ANSWERS
Semi-globalization - ANSWER Firms balance pressures for globalization and
localization
CAGE Distance - ANSWER - It is not just market size that matters when entering a new
country, but also the CAGE distance between home and host countries.
- The greater the distance between two countries, the more difficult for a firm to transfer
competitive advantage abroad.
New phase of Globalization - ANSWER - Basic changes to the worldwide environment
create present and future challenges for multinational strategy and organization
Dilemmas of International Trade - ANSWER - Multinational firms need to manage
values, security and distributional dilemmas (non-market strategy)
Outsourcing/ Global Supply Chain - ANSWER - Firms need to manage how and when
they globally integrate the production of their product
Comparative Advantage - ANSWER - Firms seek out national differences in
comparative advantage to develop firm-level competitive advantages
Tradable/ non-routine tasks - ANSWER - Best paying jobs in international business
require non-routine competencies
Transnational Mindset - ANSWER - Transnational mindsets are an example of a non-
routine competency that is difficult to outsource
Culture - ANSWER - is the way through which we make sense of the world and,
consequently, it shapes:
- Our perceptions
-The rules and norms that we know or decide to -follow
- How we make sense of events and social interactions
- What we do
- Our needs
- What we consume
- Our beliefs
- Our perceived friends and enemies
- Our likes and dislikes
- Our values
, CAGE Distance Framework (Ghemawat) - ANSWER - If a business perform well at
home it doesn't mean that it will necessarily perform well abroad
Semi-globalization perspective: distance and borders still matter!!!
- CAGE is a COMPARATIVE framework: It doesn't tell us how Country A is but it tells us
how Country A is AS SEEN from Country B (unlike competitiveness index)
One way to classify the different types of value-creating activities that MNEs perform
abroad is to - ANSWER -distinguish between horizontal and vertical foreign activity
Vertical expansion occurs when - ANSWER - a firm locates assets or employees in a
foreign country with the purpose of securing the production of a raw material or input
(backward vertical expansion) or the distribution and sale of a good or service (forward
vertical expansion).
For a multinational firm to vertically expand there - ANSWER - must be a comparative
advantage in the foreign location.
- The advantage typically has to do with the prices or productivity of production factors
such as capital, labor, or land.
- ex: a clothing firm may consider production in a foreign location to take advantage of
lower labor costs.
Horizontal expansion occurs when - ANSWER - the firm sets up a plant or service
delivery facility in a foreign location with the goal of selling in that market without
necessarily changing its global production system.
The decision to engage in horizontal expansion is driven by - ANSWER - forces
different than those for vertical expansion
The sale of a good or service in a foreign market is desirable in the presence of -
ANSWER - protectionist barriers, high transportation costs, unfavorable currency
exchange rate shifts, or requirements for local adaptation to the peculiarities of local
demand that make exporting from the home country unfeasible or unprofitable.
Seek New Markets (Extend existing competitive advantages) - ANSWER - Does the
company have a competitive advantage that can work abroad?
- Need to analyze whether key sources of competitive advantage can be transferred to
a particular country
- Example: Wal-Mart is seeking to operate stores in China
Develop World-Wide Competitive Advantage (Seek new sources of competitive
advantage) - ANSWER - Can the company go abroad to develop a world-wide
competitive advantage?
- Need to analyze the degree to which value chain can be integrated around the world
to develop global sources of competitive advantage
- Example: Wal-Mart buys many of its products from China
QUESTIONS & ANSWERS
Semi-globalization - ANSWER Firms balance pressures for globalization and
localization
CAGE Distance - ANSWER - It is not just market size that matters when entering a new
country, but also the CAGE distance between home and host countries.
- The greater the distance between two countries, the more difficult for a firm to transfer
competitive advantage abroad.
New phase of Globalization - ANSWER - Basic changes to the worldwide environment
create present and future challenges for multinational strategy and organization
Dilemmas of International Trade - ANSWER - Multinational firms need to manage
values, security and distributional dilemmas (non-market strategy)
Outsourcing/ Global Supply Chain - ANSWER - Firms need to manage how and when
they globally integrate the production of their product
Comparative Advantage - ANSWER - Firms seek out national differences in
comparative advantage to develop firm-level competitive advantages
Tradable/ non-routine tasks - ANSWER - Best paying jobs in international business
require non-routine competencies
Transnational Mindset - ANSWER - Transnational mindsets are an example of a non-
routine competency that is difficult to outsource
Culture - ANSWER - is the way through which we make sense of the world and,
consequently, it shapes:
- Our perceptions
-The rules and norms that we know or decide to -follow
- How we make sense of events and social interactions
- What we do
- Our needs
- What we consume
- Our beliefs
- Our perceived friends and enemies
- Our likes and dislikes
- Our values
, CAGE Distance Framework (Ghemawat) - ANSWER - If a business perform well at
home it doesn't mean that it will necessarily perform well abroad
Semi-globalization perspective: distance and borders still matter!!!
- CAGE is a COMPARATIVE framework: It doesn't tell us how Country A is but it tells us
how Country A is AS SEEN from Country B (unlike competitiveness index)
One way to classify the different types of value-creating activities that MNEs perform
abroad is to - ANSWER -distinguish between horizontal and vertical foreign activity
Vertical expansion occurs when - ANSWER - a firm locates assets or employees in a
foreign country with the purpose of securing the production of a raw material or input
(backward vertical expansion) or the distribution and sale of a good or service (forward
vertical expansion).
For a multinational firm to vertically expand there - ANSWER - must be a comparative
advantage in the foreign location.
- The advantage typically has to do with the prices or productivity of production factors
such as capital, labor, or land.
- ex: a clothing firm may consider production in a foreign location to take advantage of
lower labor costs.
Horizontal expansion occurs when - ANSWER - the firm sets up a plant or service
delivery facility in a foreign location with the goal of selling in that market without
necessarily changing its global production system.
The decision to engage in horizontal expansion is driven by - ANSWER - forces
different than those for vertical expansion
The sale of a good or service in a foreign market is desirable in the presence of -
ANSWER - protectionist barriers, high transportation costs, unfavorable currency
exchange rate shifts, or requirements for local adaptation to the peculiarities of local
demand that make exporting from the home country unfeasible or unprofitable.
Seek New Markets (Extend existing competitive advantages) - ANSWER - Does the
company have a competitive advantage that can work abroad?
- Need to analyze whether key sources of competitive advantage can be transferred to
a particular country
- Example: Wal-Mart is seeking to operate stores in China
Develop World-Wide Competitive Advantage (Seek new sources of competitive
advantage) - ANSWER - Can the company go abroad to develop a world-wide
competitive advantage?
- Need to analyze the degree to which value chain can be integrated around the world
to develop global sources of competitive advantage
- Example: Wal-Mart buys many of its products from China
