MNC Strategy Exam 1 Questions & Answers 2024-25

MNC Strategy Exam 1 Questions & Answers 2024-25 MNE - ANSWERSMust have "substantial direct investment" in foreign countries. Must have "active management" of overseas operations Influence | Statistics according to the UN: - ANSWERSOver 130 million firms. Foreign affiliates of MNEs generated approx. $8trillion in value. Traditional Motivations - ANSWERSSecure key supplies (tangible products, services) Market-seeking behavior (unique skill, core competence) Access low-cost factors of production Secure key supplies - ANSWERSAluminum companies seeking Bauxite. Prior to the 1980s: - ANSWERSThe product life cycle(PLC) theory could explain much of a company's motivation to internationalize. After the 1980s the PLC does not explain much about the reasoning for internationalization today. Emerging Motivations - ANSWERSIncreasing scale economies, R&D investments, and a shortened PLC. The MNE's global scanning and learning capabilities-alternatives regarding labor, technology, etc. Increased competitive positioning allowing cross-subsidization of markets Cross-subsidization of markets - ANSWERSUsing profits of a subsidiary in one market to subsidize an unprofitable subsidiary in another. Prerequisites for Becoming an MNE: - ANSWERSMust have motivation to invest overseas. Must have strategic competencies/ownership-specific advantages. (finances)