Ch.5

Question 1

Globalization refers to the

Answer 1

strategy of pursuing opportunities anywhere in the world that enable a firm to optimize its business functions in the countries in which it operates.

Question 2

Four Levels of globalization

Answer 2

Level 1 – export/import activity has minimal effect on the existing management orientation or on existing product lines
Level 2 – foreign licensing and technology transfer requires little change in management or operation
Level 3 – direct investment in overseas operations –is characterized by large capital outlays and the development of global management skills
Level 4 – substantial increase in foreign investment – the firm begins to emerge as a global enterprise with foreign assets comprising a significant portion of total assets

Question 3

Reasons for Going Global: Proactive and Reactive

Answer 3

Proactive: Additional resources
Lowered costs
Incentives
New, expanded markets
Exploitation of firm-specific advantages
Taxes

REACTIVE: 
Trade barriers
International customers
International competition
Regulations
Chance

Question 4

4 Strategic Orientations of Global Firms

Answer 4

Ethnocentric, Polycentric, Regiocentric, Geocentric

Question 5

Ethnocentric orientation

Answer 5

When the values and priorities of the parent organization guide the strategic decision making of all its international operations

Question 6

Polycentric orientation

Answer 6

When the culture of the country in which the strategy is to be implemented is allowed to dominate a company’s international decision making process

Question 7

Regiocentric orientation

Answer 7

When a parent company blends its own predisposition with those of its international units to develop region-sensitive strategies.

Question 8

Geocentric orientation

Answer 8

When an international firm adopts a systems approach to strategic decision making that emphasizes global integration.

Question 9

A multidomestic industry is one in which

Answer 9

competition is essentially segmented from country to country

In a multidomestic industry, a global corporation’s subsidiaries should be managed as distinct entities

Question 10

A global industry is one in which competition

Answer 10

crosses national borders

Question 11

Niche Market Exporting

Answer 11

The primary niche market approach for the company that wants to export is to modify select product performance or measurement characteristics to meet special foreign demands