Management chapt 1
Chapter 1
Expanding abroad:
Motivations, means, and mentalities
True/False
1. The largest MNEs are equivalent in their economic importance to less developed economies such as Tanzania, Estonia or Sri Lanka.
Answer: False (Sales of the largest MNEs exceed the GDPs of less developed countries.)
Difficulty: Easy
Page: 4 and Table 1-1 on page 3
Topic: MNE scope and influence
2. The process of internationalization followed by most firms is usually well-thought out in advance and typically builds on a combination of rational analysis, planning and implementation.
Answer: False (It is more likely a combination of rational analysis, opportunism, and luck. In regards to opportunism, several studies have found that most firms begin exporting due to an unsolicited export order.)
Difficulty: Moderate
Page: 9
Topic: Internationalization process
3. All companies internationalize in an incremental manner. First, they make an initial commitment of resources to the foreign market in order to secure local market knowledge. Building on this knowledge, they make subsequent resource commitments, eventually leading to higher levels of investment in the foreign market.
Answer: False (There are many exceptions to the incremental approach. Some firms are “born globals”. Other firms retain the same mode, including level of subsidiary involvement, in all foreign markets.)
Difficulty: Moderate
Page: 9, third paragraph and p. 10.
Topic: Internationalization process
4. A joint venture is a contractual mode of foreign entry involving a high level of resource commitment by all partners.
Answer: False (A JV will not typically require as high a resource commitment as we would see in wholly owned subsidiaries. In addition, there is significant variability in the level of resources contributed by partners.)
Difficulty: Moderate
Page: 10
Topic: Foreign entry mode
5. Emerging motivations for internationalization include the desire to enhance the firm’s
Expanding abroad:
Motivations, means, and mentalities
True/False
1. The largest MNEs are equivalent in their economic importance to less developed economies such as Tanzania, Estonia or Sri Lanka.
Answer: False (Sales of the largest MNEs exceed the GDPs of less developed countries.)
Difficulty: Easy
Page: 4 and Table 1-1 on page 3
Topic: MNE scope and influence
2. The process of internationalization followed by most firms is usually well-thought out in advance and typically builds on a combination of rational analysis, planning and implementation.
Answer: False (It is more likely a combination of rational analysis, opportunism, and luck. In regards to opportunism, several studies have found that most firms begin exporting due to an unsolicited export order.)
Difficulty: Moderate
Page: 9
Topic: Internationalization process
3. All companies internationalize in an incremental manner. First, they make an initial commitment of resources to the foreign market in order to secure local market knowledge. Building on this knowledge, they make subsequent resource commitments, eventually leading to higher levels of investment in the foreign market.
Answer: False (There are many exceptions to the incremental approach. Some firms are “born globals”. Other firms retain the same mode, including level of subsidiary involvement, in all foreign markets.)
Difficulty: Moderate
Page: 9, third paragraph and p. 10.
Topic: Internationalization process
4. A joint venture is a contractual mode of foreign entry involving a high level of resource commitment by all partners.
Answer: False (A JV will not typically require as high a resource commitment as we would see in wholly owned subsidiaries. In addition, there is significant variability in the level of resources contributed by partners.)
Difficulty: Moderate
Page: 10
Topic: Foreign entry mode
5. Emerging motivations for internationalization include the desire to enhance the firm’s