Chapterg1gExpandi
nggabroad:
Motivations,gmeans,gandgmentalities
True/False
1. TheglargestgMNEsgaregequivalentgingtheirgeconomicgimportancegtoglessgdevelopedgeconomiesgs
uchgasgNigeria,gMoldova,gorgJamaica.
ANS:Falseg(SalesgofgtheglargestgMNEsgexceedgthegGDPsgofglessgdevelopedgcountries.)gDifficulty
:gModerate
Pg:g16gandgTableg1.3g(16)
Subject:gMNEginfluencegingthegglobalgeconomy
2. Thegprocessgofginternationalizationgfollowedgbygmostgfirmsgisgusuallygwell-
thoughtgoutgingadvancegandgtypicallygbuildsgongagcombinationgofgrationalganalysis,gplannin
ggandgimplementation.
ANS:Falseg(Itgisgmoreglikelygagcombinationgofgrationalganalysis,gopportunism,gandgluck.gIngreg
ardsgtogopportunism,gseveralgstudiesghavegfoundgthatgmostgfirmsgbegingexportinggduegtoganguns
olicitedgexportgorder.)
Difficulty:gModerateg
Pg:g22-23
Subject:gThegProcessgofgInternationalization
3. Allgcompaniesginternationalizegingangincrementalgmanner.gFirst,gtheygmakeganginitialgcommi
tmentgofgresourcesgtogthegforeigngmarketgingordergtogsecureglocalgmarketgknowledge.gBuildin
ggongthisgknowledge,gtheygmakegsubsequentgresourcegcommitments,geventuallygleadinggtogh
igherglevelsgofginvestmentgingthegforeigngmarket.
ANS:Falseg(Theregaregmanygexceptionsgtogthegincrementalgapproach.gSomegfirmsgareg“borngglo
bals”.gOthergfirmsgretaingthegsamegmode,gincludingglevelgofgsubsidiaryginvolvement,gingallgforeig
ngmarkets.)
Difficulty:gModerateg
Pg:g23
Subject:gThegProcessgofgInternationalization
4. Agjointgventuregisgagcontractualgmodegofgforeigngentryginvolvinggaghighglevelgofgresourcegc
ommitmentgbygallgpartners.
ANS:Falseg(AgJVgwillgnotgtypicallygrequiregasghighgagresourcegcommitmentgasgwegwouldgseeging
whollygownedgsubsidiaries.gIngaddition,gtheregisgsignificantgvariabilitygingtheglevelgofgresourcesgc
ontributedgbygpartners.)
1
,Difficulty:g ModerategPg:
24g(Figureg1.2)gSubject:
Foreigngentrygmode
5. Emerginggmotivationsgforginternationalizationgincludegthegdesiregtogenhancegthegfirm’sg
competitivegpositiongandgthegdesiregtogdevelopgglobalgscanninggcapabilities.
ANS:TruegDiffi
culty:
ModeratePg:
19-20
Subject:gEmerginggMotivations
6. ForgangMNEgtogexist,gfirstgforeigngcountriesgmustgprovideglocation-
specificgadvantagesgtogattractgthegcompanygtoginvestgthere,gsecondgthegcompanygmustghavegow
nership-
specificgadvantagesgthatgcounteractgitsgliabilitygofgforeignness,gthirdgthegcompanygmustghavegt
hegorganizationalgcapabilitygtogleveragegitsgstrategicgadvantagesgmoregeffectivelyginternallygth
angexternally.
ANS:TruegDifficulty
:gModerategPg:g22
Subject:gPrerequisitesgforginternationalization
7. AngMNEgwithgang‘internationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinatedgf
ederation.
ANS:TruegDifficulty
:gModerategPg:g26
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
8. AngMNEgwithgag‘multinationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinatedgf
ederation.
ANS:Falseg(Itgwillgtypicallygbegmanagedgasgagdecentralizedgfederation.)Difficulty:gModerat
e
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. Thegcoregadvantagegmultinationalgmentalityghasgovergglobalgmentalitygisgmoregefficientg
manufacturing.
ANS:Falseg(itgisgthegothergwaygaround)Difficulty:
Moderate
gPg:g26-
27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
12. RaymondgVernon’sgarticleg“Gonegaregthegcashgcowsgofgyesteryear”ghighlightsgagcompany’sg
globalgscanninggandglearninggcapability.
ANS:TruegDiffi
culty:gHard
Pgg19g(footnoteg10)
Subject:gEmerginggMotivations
13. Onlygonegarticlegfurthergdevelopsgthegideagthatg“thegprocessgofgdevelopinggthesegstrategicgandgo
rganizationalgattributesgliesgatgthegheartgofgtheginternationalizationgprocessgthroughgwhichgagco
mpanygbuildsgitsgpositiongingworldgmarkets.
ANS:Falseg(2garticlesgfurthergdevelopgthegidea:gA.gJonssongandgN.gJ.gFoss,g“Internationalgexp
ansiongthroughgflexiblegreplication:glearninggfromgtheginternationalizationgexperiencegofgIKE
A,”gJournalgofgInternationalgBusinessgStudies,g42:9g(2011),
1079–
1102gandgJ.gW.gLugandgP.gW.gBeamish,g“Internationalgdiversificationgandgfirmg performance:gthegS-
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(AgtruegMNEgisgagcompanygthatghasgsubstantialgdirectginvestmentgingforeigngcountries,ga
ndgthatgactivelygmanagesgandgregardsgitsgforeigngoperationsgasgintegralgpartsgofgthegcompany,gb
othgstrategicallygandgorganizationally.gCompaniesgthatgeithergdognotgholdgequitygpositionsgorgh
oldgminorgequitygpositionsgingoverseasgventuresgwithoutgorgwithgveryglowgmanagement
involvementgmaygbegviewedgasg“international”gcompaniesgbutgwouldgnotgbegregardedgasgmultina
tionalgenterprises.)
Difficulty:gModerateg
Pg:g12
Subject:gMNEgdefinition
15. Threegprerequisitesgthatgmustgbegsatisfiedgbeforegagnationalgfirmgcangtransformgitselfgintogag
multinationalgfirmginclude:
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,ginsufficientgtogjustifygthegint
ernationalizationgofgoperations.gWithgmuchglessgeffortgagcompanygoftengcangsellgorglicensegitstec
hnologygtogforeigngproducers,gfranchisegitsgbrandgnameginternationally,gorgsellgitsgproductsgabroa
dgthroughglocalgdistributors,gwithoutghavinggtogsetgupgitsgowngoffshoregoperations.)gDifficulty:g
Moderategtoghard
Pg:g22
Subject:gPrerequisitesgforginternationalization
16. Whichgofgthegfollowinggcorrectlygdescribesgthegsequentialgevolutiongingmanagementgthinkingg
withgrespectgtogthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs?
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,galthoughgtheygdescribegthegdifferentgwaysgofgmanagementgth
inkinggregardinggthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs,gtheydognotgdescribegt
hegevolutiongofgthisgthinkinggingthegcorrectgsequence.)
4
nggabroad:
Motivations,gmeans,gandgmentalities
True/False
1. TheglargestgMNEsgaregequivalentgingtheirgeconomicgimportancegtoglessgdevelopedgeconomiesgs
uchgasgNigeria,gMoldova,gorgJamaica.
ANS:Falseg(SalesgofgtheglargestgMNEsgexceedgthegGDPsgofglessgdevelopedgcountries.)gDifficulty
:gModerate
Pg:g16gandgTableg1.3g(16)
Subject:gMNEginfluencegingthegglobalgeconomy
2. Thegprocessgofginternationalizationgfollowedgbygmostgfirmsgisgusuallygwell-
thoughtgoutgingadvancegandgtypicallygbuildsgongagcombinationgofgrationalganalysis,gplannin
ggandgimplementation.
ANS:Falseg(Itgisgmoreglikelygagcombinationgofgrationalganalysis,gopportunism,gandgluck.gIngreg
ardsgtogopportunism,gseveralgstudiesghavegfoundgthatgmostgfirmsgbegingexportinggduegtoganguns
olicitedgexportgorder.)
Difficulty:gModerateg
Pg:g22-23
Subject:gThegProcessgofgInternationalization
3. Allgcompaniesginternationalizegingangincrementalgmanner.gFirst,gtheygmakeganginitialgcommi
tmentgofgresourcesgtogthegforeigngmarketgingordergtogsecureglocalgmarketgknowledge.gBuildin
ggongthisgknowledge,gtheygmakegsubsequentgresourcegcommitments,geventuallygleadinggtogh
igherglevelsgofginvestmentgingthegforeigngmarket.
ANS:Falseg(Theregaregmanygexceptionsgtogthegincrementalgapproach.gSomegfirmsgareg“borngglo
bals”.gOthergfirmsgretaingthegsamegmode,gincludingglevelgofgsubsidiaryginvolvement,gingallgforeig
ngmarkets.)
Difficulty:gModerateg
Pg:g23
Subject:gThegProcessgofgInternationalization
4. Agjointgventuregisgagcontractualgmodegofgforeigngentryginvolvinggaghighglevelgofgresourcegc
ommitmentgbygallgpartners.
ANS:Falseg(AgJVgwillgnotgtypicallygrequiregasghighgagresourcegcommitmentgasgwegwouldgseeging
whollygownedgsubsidiaries.gIngaddition,gtheregisgsignificantgvariabilitygingtheglevelgofgresourcesgc
ontributedgbygpartners.)
1
,Difficulty:g ModerategPg:
24g(Figureg1.2)gSubject:
Foreigngentrygmode
5. Emerginggmotivationsgforginternationalizationgincludegthegdesiregtogenhancegthegfirm’sg
competitivegpositiongandgthegdesiregtogdevelopgglobalgscanninggcapabilities.
ANS:TruegDiffi
culty:
ModeratePg:
19-20
Subject:gEmerginggMotivations
6. ForgangMNEgtogexist,gfirstgforeigngcountriesgmustgprovideglocation-
specificgadvantagesgtogattractgthegcompanygtoginvestgthere,gsecondgthegcompanygmustghavegow
nership-
specificgadvantagesgthatgcounteractgitsgliabilitygofgforeignness,gthirdgthegcompanygmustghavegt
hegorganizationalgcapabilitygtogleveragegitsgstrategicgadvantagesgmoregeffectivelyginternallygth
angexternally.
ANS:TruegDifficulty
:gModerategPg:g22
Subject:gPrerequisitesgforginternationalization
7. AngMNEgwithgang‘internationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinatedgf
ederation.
ANS:TruegDifficulty
:gModerategPg:g26
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
8. AngMNEgwithgag‘multinationalgmentality’gwillgtypicallygbegmanagedgasgagcoordinatedgf
ederation.
ANS:Falseg(Itgwillgtypicallygbegmanagedgasgagdecentralizedgfederation.)Difficulty:gModerat
e
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. Thegcoregadvantagegmultinationalgmentalityghasgovergglobalgmentalitygisgmoregefficientg
manufacturing.
ANS:Falseg(itgisgthegothergwaygaround)Difficulty:
Moderate
gPg:g26-
27
Subject:gThegevolvinggmentality:ginternationalgtogtransnational
12. RaymondgVernon’sgarticleg“Gonegaregthegcashgcowsgofgyesteryear”ghighlightsgagcompany’sg
globalgscanninggandglearninggcapability.
ANS:TruegDiffi
culty:gHard
Pgg19g(footnoteg10)
Subject:gEmerginggMotivations
13. Onlygonegarticlegfurthergdevelopsgthegideagthatg“thegprocessgofgdevelopinggthesegstrategicgandgo
rganizationalgattributesgliesgatgthegheartgofgtheginternationalizationgprocessgthroughgwhichgagco
mpanygbuildsgitsgpositiongingworldgmarkets.
ANS:Falseg(2garticlesgfurthergdevelopgthegidea:gA.gJonssongandgN.gJ.gFoss,g“Internationalgexp
ansiongthroughgflexiblegreplication:glearninggfromgtheginternationalizationgexperiencegofgIKE
A,”gJournalgofgInternationalgBusinessgStudies,g42:9g(2011),
1079–
1102gandgJ.gW.gLugandgP.gW.gBeamish,g“Internationalgdiversificationgandgfirmg performance:gthegS-
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(AgtruegMNEgisgagcompanygthatghasgsubstantialgdirectginvestmentgingforeigngcountries,ga
ndgthatgactivelygmanagesgandgregardsgitsgforeigngoperationsgasgintegralgpartsgofgthegcompany,gb
othgstrategicallygandgorganizationally.gCompaniesgthatgeithergdognotgholdgequitygpositionsgorgh
oldgminorgequitygpositionsgingoverseasgventuresgwithoutgorgwithgveryglowgmanagement
involvementgmaygbegviewedgasg“international”gcompaniesgbutgwouldgnotgbegregardedgasgmultina
tionalgenterprises.)
Difficulty:gModerateg
Pg:g12
Subject:gMNEgdefinition
15. Threegprerequisitesgthatgmustgbegsatisfiedgbeforegagnationalgfirmgcangtransformgitselfgintogag
multinationalgfirmginclude:
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,ginsufficientgtogjustifygthegint
ernationalizationgofgoperations.gWithgmuchglessgeffortgagcompanygoftengcangsellgorglicensegitstec
hnologygtogforeigngproducers,gfranchisegitsgbrandgnameginternationally,gorgsellgitsgproductsgabroa
dgthroughglocalgdistributors,gwithoutghavinggtogsetgupgitsgowngoffshoregoperations.)gDifficulty:g
Moderategtoghard
Pg:g22
Subject:gPrerequisitesgforginternationalization
16. Whichgofgthegfollowinggcorrectlygdescribesgthegsequentialgevolutiongingmanagementgthinkingg
withgrespectgtogthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs?
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,galthoughgtheygdescribegthegdifferentgwaysgofgmanagementgth
inkinggregardinggthegstrategicgrolegofgforeigngoperationsgingemerginggMNEs,gtheydognotgdescribegt
hegevolutiongofgthisgthinkinggingthegcorrectgsequence.)
4
