Introduction to international business

Question 1

International business strategy

Answer 1

Effectively and efficiently matching the internal strengths (relative to competitors) with the opportunities and challenges found in geographically dispersed environments that cross international borders.

Such matching is a precondition to creating value and satisfying stakeholder goals, both domestically and internationally.

Question 2

The seven concepts of the unifying framework

Answer 2

Internationally transferable firm-specific advantages (FSAs)

Non transferable FSAs

Location advantages

Investment in - and value creation through - recombination

Complementary resources of external actors

Bounded rationality

Bounded reliability

Question 3

Centralised exporter

Answer 3

Home country managed firm builds upon a tradition of selling products internationally, out of highly cost efficient or exceptional quality generating facilities in the home country .

Question 4

International projector

Answer 4

Firm builds upon a tradition of transferring its proprietary knowledge developed in the home country to foreign subsidiaries, which are essentially closeness of the home operations.

Question 5

International coordinator

Answer 5

International operations are specialised in specific value added activities and form vertical value chains across borders.

The MNE’s key FSAs are in efficiently linking these geographically dispersed operations through seamless logistics.

A lot of natural resources industries use this archetype.

Question 6

Multi-centred MNE

Answer 6

This firm’s international success does not build primarily on knowledge based FSAs developed in the home country.

It consists of a set of entrepreneurial subsidiaries abroad, which are key to knowledge based FSA development.

National responsiveness is the foundation of the international strategy.

The non location bound FSAs that hold these firms together are minimal: common financial governance and the identity and specific business interests of the founders or main owners.

Question 7

Commonality between the types of 4 types of MNE archetypes

Answer 7

They transfer at least some FSAs across borders.

Question 8

Examples of unique resources

Answer 8

Financial resources,
Human resources,
Physical resources.
Upstream knowledge
Downstream knowledge
Administrative knowledge
Repetitional resources

Question 9

What do you need extra with a unique resource to make a FSA?

Answer 9

Need to learn routines, and to develop new things to stay competitive.

Question 10

Types of FSAs:

Answer 10

Location bound: staying the home country (eg; brand name)

Non location bound: (eg: technology)

Question 11

Reasons that FSAs are location bound:

Answer 11

Uses resources linked to location advantages

The firm has deep knowledge of local marketing or reputation

The firm has developed a unique way of working that is local

A firm has an entrepreneurial potential which is difficult to transfer across borders to a different context.

Question 12

Transferable FSA

Answer 12

If the FSA consist of easily codificable knowledge (and can be written down in a handbook), then it can be cheaply transferred, but it can also easily be imitated by other firms

Question 13

Reasons that a firm goes to a new country:

Answer 13

Natural resource seeking
Market seeking
Efficiency seeking
Strategic resource seeking
Export platform MNE activity

Question 14

Why some firms do not succeed in new countries

Answer 14

Bounded rationality

Bounded reliability

Question 15

Bounded rationality

Answer 15

Imperfect assessment

Question 16

Bounded reliability

Answer 16

Imperfect effort

Question 17

Examples of bounded rationality

Answer 17

Information is partial and incomplete
Cognitive limitations of managers
Differences in cognitive decision making between home and host

Question 18

Examples of bounded reliability

Answer 18

Opportunistic behaviour
Ex-ante false promises & ex-post reneging on promises
Local prioritisation (local success), distance from headquarter monitoring

Question 19

EMNE

Answer 19

Emerging economy MNEs

Question 20

4 motivations to perform activities in a host country rather than at home.

Answer 20

Natural resource seeking

Market seeking

Strategic resource seeking

Efficiency seeking

Question 21

The 4 types of location bound FSAs:

Answer 21

Stand alone resources linked to location advantages

Other resources such as marketing knowledge and repetitional resources.

Local best practices (eg: incentive systems for highly skilled workers)

Firm’s domestic recombination capability

Question 22

Effective recombination requires:

Answer 22

Superior technology on the upstream side, market research skills on the downstream side, recognised brand names at the repetitional side, competent administration of current operations. Entrepreneurial skills

Question 23

Resource recombination requires 3 things:

Answer 23

Entrepreneurial skills possessed by managers and other employees that can be deployed in the face of new productive opportunities

Slack or unused productive resources, beyound those need for the efficient functioning of current operations

The willingness and capacity to let go of some resources embedded in extant FSAs, and to replace these by resources with higher values creating potential in host environments.