Exam 3

Question 1

What is a multinational enterprise (MNE)?

Answer 1

A company that deploys the resources and capabilities in procurement, production, and distribution of goods in at least two areas

Question 2

Explain the three different stages of globalization

Answer 2

1. 0 - 1900-1941
2. 0 - 1945-2000
3. 0 - 2000 -

Question 3

What are the advantages to going global?

Answer 3

Gain access to a larger market
Gain new compenticies
lower cost inputs

Question 4

What are the disadvantages to going global?

Answer 4

liability of foreigness
loss of intellectual property
loss of reputation

Question 5

What is liability of foreignness?

Answer 5

working in a unfamiliar cultural or economic environment

can result in additional costs

Question 6

Describe the CAGE framework

Answer 6

Cultural - lack of connective culture causing lack of trust
Administrative - absence of trading bloc or political hostility, lack of common currency
Geographic - different climates and timezone, inaccessibility of borders and waterways
Economic - different consumer incomes, different costs and quality of life

Question 7

Name examples of political and admin barriers

Answer 7

Tariffs
Trade quotas
FDI restrictions

Question 8

What is the globalization hypothesis?

Answer 8

The assumption that consumer needs and preferences are converging and becoming homogenous

Question 9

What is local responsiveness?

Answer 9

The need to tailor product and service offerings to local consumer preferences and host country requirements

Question 10

What is the integration-responsiveness framework?

Answer 10

Strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally.

Question 11

What is international strategy?

Answer 11

Strategy that involves leveraging core competencies in domestic and foreign markets by selling the same products or services

Question 12

What is a multi-domestic strategy?

Answer 12

Strategy pursued by MNEs that utilizes local responsiveness to make a foreign entity seem domestic

Question 13

What is the global standardization strategy?

Answer 13

Strategy attempting to reap economies of scale and location by pursuing a global division of labor based on wherever best of class capabilities reside at the lowest cost

Question 14

What is the transnational strategy?

Answer 14

strategy that attempts to combine the benefits of a localization strategy (high local responsiveness) with those of a global standardization strategy (lowest cost position attainable)

Question 15

What is the death of distance hypothesis?

Answer 15

The assumption that distance will not lead to competitive advantage because firms are now able to source inputs globally

Question 16

What are factor conditions?

Answer 16

Describe a country’s endowments in terms of natural, human, capital, and other resources

Question 17

What are the building blocks of organizational structure?`

Answer 17

specialization, hierarchy, formalization, and centralization`

Question 18

What is specialization?

Answer 18

the extent to which a task is divided into seperate jobs `

Question 19

What is formalization?

Answer 19

codified rules and procedures within an org

Question 20

What are the drawbacks to functional structure?

Answer 20

Lack of communication between divisions

can’t effectively address a higher level of diversification

Question 21

What is M form?

Answer 21

organizational structure that consists of several SBUs each with its own profit and loss responsibility

Question 22

What is matrix structure?

Answer 22

combines the organizational structure with the M form

Question 23

What are disadvantages to the matrix structure?

Answer 23

creates additional organizational complexity
performance appraisals more difficult
increases admin costs
employees have trouble reconciling goals
multiple supervisors

Question 24

What is the network structure?

Answer 24

allows the firm to connect centers of excellence, whatever their global location
firm benefits from communities of practice

Question 25

What are the benefits of being publically traded?

Answer 25

Limited liabiity for investors
Transferability of investor ownership
legal personality
separation of legal ownership and management control

Question 26

What is adverse selection?

Answer 26

IDK how to describe this but Prof Boring says its like in the home loan crisis when someone took out a home equity for a house that was more than they could afford

Question 27

What is a leveraged buyout?

Answer 27

When a single investor or company leverages their assets to buy shares of a company to take it private

Question 28

What is a poison pill?

Answer 28

Defensive provisions to deter hostile takeover by making the hostile firm less attractive