Globalization Test Questions
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. 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
4. Emerging motivations for internationalization include the desire to enhance the firm’s competitive position and the desire to develop global scanning capabilities.
Answer: True
Difficulty: Easy
Page: 6-7 and ppt slide 1-6
Topic: Motivations for internationalization
5. For an MNE to exist, first foreign countries must provide location-specific advantages to attract the company to invest there, second the company must have ownership-specific advantages that counteract its liability of foreignness, third the company must have the organizational capability to leverage its strategic advantages more effectively internally than externally.
Answer: True
Difficulty: Moderate
Page: 7-8
Topic: Prerequisites for internationalization
6. An MNE
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. 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
4. Emerging motivations for internationalization include the desire to enhance the firm’s competitive position and the desire to develop global scanning capabilities.
Answer: True
Difficulty: Easy
Page: 6-7 and ppt slide 1-6
Topic: Motivations for internationalization
5. For an MNE to exist, first foreign countries must provide location-specific advantages to attract the company to invest there, second the company must have ownership-specific advantages that counteract its liability of foreignness, third the company must have the organizational capability to leverage its strategic advantages more effectively internally than externally.
Answer: True
Difficulty: Moderate
Page: 7-8
Topic: Prerequisites for internationalization
6. An MNE