BMAL 590 GLOBAL DIMENSIONS
OF BUSINESS PRACTICE EXAM
QUESTIONS AND ANSWERS
Strategic impacts of MNEs on knowledge management - Answer-Home replication:
interdependence is moderate & role of subsidiaries is largely to adapt/leverage parent
company competencies; knowledge is developed at the center & flows to subsidiaries in
the traditional, one-way flow
Localization: interdependence is low; Knowledge management centers on developing
knowledge that can be tackled locally
Global standardization: interdependence is increased; knowledge is developed and
retained at the center/centers of excellence; extensive flow of knowledge/people from
HQ onto other subsidiaries
Transnational: interdependence is high; extensive bidirectional flows of knowlege
Research & Development (R&D) - Answer-Knowledge management arena driven by the
intensification of competition for innovation; aka innovation-seeking investment
Theory of agglomeration - Answer-Clusters of high caliber, innovative firms within a
country/region can be used by firms in making foreign direct investment decisions
Centralization vs Decentralization debate - Answer-Arguments favoring centralization
have 3 considerations: 1) the ability to facilitate corporate-wide coordination, 2) the
consistency of decision-making, and 3) the given power for corporate-level managers to
initiate necessary actions
Arguments favoring decentralization have 3 assertions: 1) that it reduces corporate-level
managers' overload of duties and improves decision quality, 2) it better motivates
subsidiary-level managers/employees thru empowerment, and 3) this approach permits
greater speed/flexibility/innovation
Integrated Network (N-form) - Answer-The ideal relationship between HQs and
subsidiaries, and among subsidiaries themselves, would follow a model that leverages
business & cultural diversity
3 Customer-focused strategy dimensions - Answer-1. Global account structure: supply
customers in a coordinated & consistent way across various countries; emphasis to give
, large customers dedicated support teams that report exclusively to a global account
executive
2. Industry sector structure: common in professional service firms
3. Solutions-based structure: focus on offering whatever combo of products necessary
for customer satisfaction
4 Implications for the Savvy Strategist - Answer-1. Strategists should know the
nature/evolution of their industry to determine the right strategy-structure combo
2. Managers need to actively develop learning/innovation abilities to leverage
multinational presence; "think global, act local"
3. Mastering external rules of the game governing MNEs and host country environments
is a must
4. Managers need to understand & be prepared to changer the internal rules of the
game governing NE management
Liability of foreignness - Answer-The inherent disadvantage foreign firms experience in
host countries because of their non-native status
2 dimensions: 1) numerous differences exist in formal/informal institutions governing the
game rules (regulatory/language/cultural). 2. Foreign firms often still face
formal/informal discrimination
2 factors underlying global decisions - Answer-1. The size of the firm
2. The size of the domestic market
Enthusiastic internationalizer - Answer-Large firms in a small domestic market can
quickly exhaust opportunities in a small market
Follower internationalizers - Answer-Small firms in small domestic markets that often
follow their larger counterparts abroad as suppliers
Slow internationalizers - Answer-Large firms in a large domestic market whose
overseas activities are usually slower than enthusiastic internationalizers
Occasional internationalizer - Answer-Small firms in large domestic markets have a
poor resource base and small size within the market ("double whammy")
Industry-based considerations drawn from the 5 forces framework - Answer-1. Rivalry
among established firms my prompt certain moves
2. The higher the entry barriers, the more intense firms will be in attempting to compete
abroad
3. Bargaining power of suppliers may prompt certain foreign market entries, called
backward vertical integration, and involve multiple stages of the value chain
OF BUSINESS PRACTICE EXAM
QUESTIONS AND ANSWERS
Strategic impacts of MNEs on knowledge management - Answer-Home replication:
interdependence is moderate & role of subsidiaries is largely to adapt/leverage parent
company competencies; knowledge is developed at the center & flows to subsidiaries in
the traditional, one-way flow
Localization: interdependence is low; Knowledge management centers on developing
knowledge that can be tackled locally
Global standardization: interdependence is increased; knowledge is developed and
retained at the center/centers of excellence; extensive flow of knowledge/people from
HQ onto other subsidiaries
Transnational: interdependence is high; extensive bidirectional flows of knowlege
Research & Development (R&D) - Answer-Knowledge management arena driven by the
intensification of competition for innovation; aka innovation-seeking investment
Theory of agglomeration - Answer-Clusters of high caliber, innovative firms within a
country/region can be used by firms in making foreign direct investment decisions
Centralization vs Decentralization debate - Answer-Arguments favoring centralization
have 3 considerations: 1) the ability to facilitate corporate-wide coordination, 2) the
consistency of decision-making, and 3) the given power for corporate-level managers to
initiate necessary actions
Arguments favoring decentralization have 3 assertions: 1) that it reduces corporate-level
managers' overload of duties and improves decision quality, 2) it better motivates
subsidiary-level managers/employees thru empowerment, and 3) this approach permits
greater speed/flexibility/innovation
Integrated Network (N-form) - Answer-The ideal relationship between HQs and
subsidiaries, and among subsidiaries themselves, would follow a model that leverages
business & cultural diversity
3 Customer-focused strategy dimensions - Answer-1. Global account structure: supply
customers in a coordinated & consistent way across various countries; emphasis to give
, large customers dedicated support teams that report exclusively to a global account
executive
2. Industry sector structure: common in professional service firms
3. Solutions-based structure: focus on offering whatever combo of products necessary
for customer satisfaction
4 Implications for the Savvy Strategist - Answer-1. Strategists should know the
nature/evolution of their industry to determine the right strategy-structure combo
2. Managers need to actively develop learning/innovation abilities to leverage
multinational presence; "think global, act local"
3. Mastering external rules of the game governing MNEs and host country environments
is a must
4. Managers need to understand & be prepared to changer the internal rules of the
game governing NE management
Liability of foreignness - Answer-The inherent disadvantage foreign firms experience in
host countries because of their non-native status
2 dimensions: 1) numerous differences exist in formal/informal institutions governing the
game rules (regulatory/language/cultural). 2. Foreign firms often still face
formal/informal discrimination
2 factors underlying global decisions - Answer-1. The size of the firm
2. The size of the domestic market
Enthusiastic internationalizer - Answer-Large firms in a small domestic market can
quickly exhaust opportunities in a small market
Follower internationalizers - Answer-Small firms in small domestic markets that often
follow their larger counterparts abroad as suppliers
Slow internationalizers - Answer-Large firms in a large domestic market whose
overseas activities are usually slower than enthusiastic internationalizers
Occasional internationalizer - Answer-Small firms in large domestic markets have a
poor resource base and small size within the market ("double whammy")
Industry-based considerations drawn from the 5 forces framework - Answer-1. Rivalry
among established firms my prompt certain moves
2. The higher the entry barriers, the more intense firms will be in attempting to compete
abroad
3. Bargaining power of suppliers may prompt certain foreign market entries, called
backward vertical integration, and involve multiple stages of the value chain
