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Questions and Answers
What is the primary effect of low trade barriers on firms?
What is the primary effect of low trade barriers on firms?
Which type of firms are more sensitive to institutional differences when expanding internationally?
Which type of firms are more sensitive to institutional differences when expanding internationally?
What is a common objective for establishing foreign subsidiaries focused on resource acquisition?
What is a common objective for establishing foreign subsidiaries focused on resource acquisition?
In which scenario would a firm most likely seek to enter a culturally and institutionally distant country?
In which scenario would a firm most likely seek to enter a culturally and institutionally distant country?
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What is the aim of market-seeking investors?
What is the aim of market-seeking investors?
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Which of the following best describes efficiency-enhancing investments?
Which of the following best describes efficiency-enhancing investments?
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What kind of risks do export credit insurance primarily help SMEs to overcome?
What kind of risks do export credit insurance primarily help SMEs to overcome?
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Which strategy focuses on adapting to stand-alone local markets while maximizing local responsiveness?
Which strategy focuses on adapting to stand-alone local markets while maximizing local responsiveness?
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What is a primary disadvantage of the home replication strategy?
What is a primary disadvantage of the home replication strategy?
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Which organizational structure is typically used when firms first expand abroad?
Which organizational structure is typically used when firms first expand abroad?
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What does a global standards strategy primarily aim to leverage?
What does a global standards strategy primarily aim to leverage?
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What is a significant characteristic of the transnational strategy?
What is a significant characteristic of the transnational strategy?
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Which of the following is a major drawback of the global standards strategy?
Which of the following is a major drawback of the global standards strategy?
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What problem does the international division structure face regarding foreign subsidiary managers?
What problem does the international division structure face regarding foreign subsidiary managers?
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What does the transnational strategy strive to achieve?
What does the transnational strategy strive to achieve?
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What is the primary goal of the LLG's acquisition program from 1997 to 2016?
What is the primary goal of the LLG's acquisition program from 1997 to 2016?
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How does the CSR-CBA connection benefit LLG's global operations?
How does the CSR-CBA connection benefit LLG's global operations?
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In the context of LLG, what does the term 'home country-employee' refer to?
In the context of LLG, what does the term 'home country-employee' refer to?
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What characterizes the CSR initiatives at LLG as they expand globally?
What characterizes the CSR initiatives at LLG as they expand globally?
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Which factor is critical for LLG's CSR-CBA interrelation?
Which factor is critical for LLG's CSR-CBA interrelation?
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What was a primary consideration for LLG when entering developed markets?
What was a primary consideration for LLG when entering developed markets?
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What aspect of leadership does LLG emphasize for its top management?
What aspect of leadership does LLG emphasize for its top management?
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What role does local volunteerism play for LLG employees in host countries?
What role does local volunteerism play for LLG employees in host countries?
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What is a worldwide mandate in the context of MNE subsidiaries?
What is a worldwide mandate in the context of MNE subsidiaries?
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What is one potential advantage of providing subsidiary managers with autonomy?
What is one potential advantage of providing subsidiary managers with autonomy?
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Which of the following statements about tacit knowledge is true?
Which of the following statements about tacit knowledge is true?
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What is a primary concern regarding subsidiary autonomy within an MNE?
What is a primary concern regarding subsidiary autonomy within an MNE?
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How is knowledge management defined within MNEs?
How is knowledge management defined within MNEs?
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Which type of knowledge is primarily captured and transmitted through IT?
Which type of knowledge is primarily captured and transmitted through IT?
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What does the changing role of MNE subsidiaries often result in?
What does the changing role of MNE subsidiaries often result in?
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What is a significant challenge associated with knowledge management in global MNEs?
What is a significant challenge associated with knowledge management in global MNEs?
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What is a primary challenge in knowledge sharing within MNEs?
What is a primary challenge in knowledge sharing within MNEs?
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Which mechanism can help mitigate knowledge transmission issues in global MNEs?
Which mechanism can help mitigate knowledge transmission issues in global MNEs?
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What is a potential downside of tying bonuses to knowledge sharing?
What is a potential downside of tying bonuses to knowledge sharing?
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What does the 'not invented here' syndrome refer to?
What does the 'not invented here' syndrome refer to?
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What role do informal integrating mechanisms play in MNEs?
What role do informal integrating mechanisms play in MNEs?
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What is an element of knowledge governance?
What is an element of knowledge governance?
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Which of the following is NOT considered a challenge in managing knowledge within MNEs?
Which of the following is NOT considered a challenge in managing knowledge within MNEs?
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How does a lack of absorptive capacity affect knowledge utilization?
How does a lack of absorptive capacity affect knowledge utilization?
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Study Notes
Institutional Factors Impacting Firms' Exports and Profitability
- Low trade barriers encourage firms to export by allowing foreign competition, motivating them to seek international opportunities.
- High tariffs promote domestic growth by encouraging companies to expand within related industries or integrate suppliers.
- Export credit insurance supports SME exporters by mitigating the uncertainties associated with international business.
Institutional Distance and Internationalization
- Smaller firms are more sensitive to institutional differences, as the cost of business increases with cultural and institutional distance.
- Internationalization models suggest that firms typically prioritize entering culturally similar countries with lower entry costs and risks.
- Natural resource-seeking firms might enter culturally and institutionally distant countries to access specific resources like bauxite, copper, or oil.
Strategic Objectives of Establishing Foreign Subsidiaries
- Entry strategy defines the objectives of entering a new market and outlines the methods to achieve them.
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Four common objectives for establishing foreign subsidiaries:
- Natural resource-seeking focuses on securing access to natural resources in specific locations.
- Market-seeking aims to tap into countries with strong demand for products and services.
- Efficiency-enhancing seeks to optimize value chain activities by identifying the most cost-efficient locations.
- Capability-enhancing seeks to acquire new ideas and technologies to enhance their own technological and managerial capabilities.
CSR and CBA Interrelation in a Global Logistics Firm
- Case study: Large Logistics Group (LLG) expanded its global footprint through acquisitions, showcasing the interrelation of corporate social responsibility (CSR) and competitive advantage building (CBA).
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LLG's acquisition program aimed to:
- Acquire transportation and storage capabilities globally.
- Internationalize from the Arabian Gulf to other regions.
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CSR-CBA connection:
- Global social responsibilities emerge with a global business footprint.
- Acquired IT, supply chain, and transportation capabilities enhance CSR delivery, especially in developed countries.
- LLG's CSR program involves distribution of items, which is facilitated by their global logistics infrastructure.
Organizational Structures in Multinational Enterprises (MNEs)
- Corporate headquarters (HQs) serve as the central unit of an MNE, hosting executives and central staff functions.
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Four common organizational structures:
- International division structure: Groups all international activities into one unit, typically used for initial expansion.
- Global product structure: Organizes activities around specific product lines, allowing for specialized focus.
- Geographic area structure: Organizes activities based on geographic regions, providing local responsiveness.
- Matrix structure: Combines elements of product, geographic, and functional structures, focusing on collaboration.
The Changing Role of MNE Subsidiaries
- Subsidiaries are embedded within the MNE and their local environment, developing unique resources and capabilities.
- Local leadership teams are typically more knowledgeable about the host country's environment.
- Subsidiaries often gain considerable autonomy within the MNE and can become leaders in specific specializations.
Knowledge Management in Global MNEs
- Knowledge management encompasses the structures, processes, and systems that actively develop, leverage, and transfer knowledge.
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Types of knowledge:
- Explicit knowledge is readily codifiable and can be written down or transferred digitally.
- Tacit knowledge is non-codifiable and acquired through hands-on practice.
- Communities of practice (CoPs) are groups of people who share a common interest in a specific topic, facilitating knowledge sharing.
- Knowledge governance refers to the structures and mechanisms that MNEs use to manage knowledge creation, integration, sharing, and utilization.
Challenges and Solutions in Knowledge Management
- Knowledge retention: Ensuring knowledge doesn't leak due to employee turnover.
- Knowledge sharing: Encouraging willingness to share knowledge within the organization.
- Knowledge transmission: Effective communication of knowledge between people and business units.
- Knowledge utilization: Encouraging the use of available knowledge by potential recipients.
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Solutions:
- Formal rules: Tying bonuses to knowledge exchange, using corporate incentives instead of individual ones, and codifying tacit knowledge.
- Informal mechanisms: Facilitating networks among subsidiaries through joint teamwork, training, and conferences, promoting a strong corporate culture of cooperation.
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Description
This quiz explores the influence of institutional factors on firms' exports and profitability. It examines low trade barriers, high tariffs, and the impact of export credit insurance on small and medium enterprises. Additionally, it delves into how institutional distance affects the internationalization strategies of firms.