Chapter 6b: Terms

Question 1

Integration responsiveness framework

Answer 1

A framework of MNE management on how to simultaneously deal with two sets of pressures for global integration and local responsiveness.

Question 2

Global integration

Answer 2

A strategy of focusing benefits of aggregating operations above the national level.

Question 3

Local responsiveness

Answer 3

A strategy that focuses on accommodation of local consumer demand and institutions.

Question 4

Home replication strategy

Answer 4

A strategy that emphasizes international replication of home country-based competences such as production scales, distribution efficiencies and brand power.

Question 5

Localization (multi domestic) strategy

Answer 5

A strategy that focuses on a number of foreign countries/regions, each of which is regarded as a stand-alone ‘local’ (domestic) market worthy of significant attention and adaptation.

Question 6

Four strategic choices for multinational enterprises

Answer 6

1. Home replication
2. Localisation
3. Global standards
4. Transnational

Question 7

Global standards strategy

Answer 7

A strategy that relies on the development and distribution of standardized products worldwide to reap the maximum benefits from low-cost advantages.

Question 8

Centre of excellence

Answer 8

An MNE subsidiary explicitly recognized as a source of important capabilities, with the intention that these capabilities be leveraged by and/or disseminated to other subsidiaries.

Question 9

Global key accounts

Answer 9

Customers who themselves operate at multiple sites where they expect delivery.

Question 10

Transnational strategy

Answer 10

A strategy that endeavours to be cost-efficient, locally responsive and learning-driven simultaneously around the world.

Question 11

Corporate headquarters

Answer 11

An MNE’s central unit that hosts corporate executives as well as central staff functions.

Question 12

International division

Answer 12

A structure bundling all international activities in one unit, often associated with a home replication strategy

Question 13

Geographic area structure

Answer 13

An organizational structure that organizes the MNE according to different countries and regions.

Question 14

Regional HQ

Answer 14

Unit coordinating business activities in a geographic area.

Question 15

Regional manager

Answer 15

The business leader of a specific geographic area.

Question 16

Global product division

Answer 16

An organizational structure that assigns global responsibilities to each product division.

Question 17

Global matrix

Answer 17

An organizational structure often used to alleviate the disadvantages associated with both geographic area and global product division structures, especially for MNEs adopting a transnational strategy.

Question 18

Knowledge management

Answer 18

The structures, processes and systems that actively develop, leverage and transfer knowledge.

Question 19

Explicit knowledge

Answer 19

Knowledge that is codifiable (that is, can be written down and transferred with little loss of its richness).

Question 20

Tacit knowledge

Answer 20

Knowledge that is non-codifiable, and its acquisition and transfer require hands-on practice.

Question 21

Organisational (team embedded) knowledge

Answer 21

Knowledge held in an organization that goes beyond the knowledge of the individual members.

Question 22

Reverse knowledge transfer

Answer 22

Knowledge created in a subsidiary being transferred from the subsidiary to a parent organization.

Question 23

Community of practice (CoP)

Answer 23

Group of people doing similar or related work and sharing knowledge about their practices of work.

Question 24

Virtual community of practice

Answer 24

Community of practice interacting via the internet

Question 25

Knowledge governance

Answer 25

The structures and mechanisms MNEs use to facilitate the creation, integration, sharing and utilization of knowledge.

Question 26

Four elements of knowledge governance

Answer 26

1. Knowledge retention
2. Knowledge sharing
3. Knowledge transmission
4. Knowledge utilisation

Question 27

Absortive capacity

Answer 27

The ability to recognize the value of new information, assimilate it and apply it.

Question 28

Social capital

Answer 28

The informal benefits individuals and organizations derive from their social structures and networks.

Question 29

Worldwide mandate

Answer 29

The charter to be responsible for one MNE function throughout the world.

Question 30

Subsidiary initiative

Answer 30

The proactive and deliberate pursuit of new opportunities by a subsidiary to expand its scope of responsibility.

Question 31

National innovation systems

Answer 31

The institutions and organizations that influence innovation activity in a country.

Question 32

business unit headquarters

Answer 32

The central coordinating unit for an entire business unit.

Question 33

Implications for action

Answer 33

● Appreciate the external rules of the game affecting the organizational structures of MNEs in home and host countries.
● Understand and be prepared to adapt the internal rules of the game governing MNE management.
● Develop learning and innovation capabilities to leverage multinational presence as an asset – ‘act local, think global’.