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Questions and Answers

What is the primary focus of International Business (IB) concerning the relationship between a firm and a new host country?

  • Managing the interplay between a firm's unique attributes and the host country environment. (correct)
  • Negotiating favorable tax incentives with the host country government.
  • Maintaining the firm's domestic practices within the host country's legal framework.
  • Minimizing the firm's environmental impact to align with host country regulations.

A multinational enterprise (MNE) is deciding where to locate different activities. Which factor exemplifies a multidimensional perspective on distance?

  • Only considering the physical kilometers between headquarters and a potential site.
  • Focusing solely on cultural similarities to ease integration.
  • Evaluating only the economic differences in labor costs.
  • Assessing geographical, institutional, cultural, and economic dimensions. (correct)

Which of the following best describes 'routines' in the context of an MNE's international business strategy?

  • Stable patterns of decisions and actions that coordinate the productive use of resources, generating ongoing value. (correct)
  • One-off marketing campaigns that exploit a temporary market opportunity.
  • Ad-hoc decisions made by the firm's executive leadership in response to immediate crises.
  • The ability to develop a valuable resource only a single time.

Which type of strategic asset is characterized mainly by specialized knowledge in marketing, sales, and after-sales services?

<p>Downstream knowledge (B)</p> Signup and view all the answers

How do Firm Specific Advantages (FSAs) primarily contribute to an MNE's success in the global marketplace?

<p>By providing a distinct competitive edge over rivals. (C)</p> Signup and view all the answers

If a company seeks to establish efficient supply chains and gain access to specific raw materials, which of the following motivations would primarily drive its international expansion?

<p>Efficiency and natural resource-seeking (C)</p> Signup and view all the answers

Which of the following entry modes involves a deeper level of integration and control compared to other options, often leading to greater long-term commitment and resource allocation?

<p>Merger and acquisition (A)</p> Signup and view all the answers

Which type of Multinational Enterprise (MNE) administrative heritage focuses primarily on replicating home country operations without developing new firm-specific advantages (FSAs)?

<p>International Projector (A)</p> Signup and view all the answers

An efficiency-seeking MNE that coordinates location advantages across multiple countries and specializes in specific value-added activities is known as what?

<p>International Coordinator (B)</p> Signup and view all the answers

Which MNE archetype leverages internationally transferable FSAs to directly target host country location advantages, typically with standardized products manufactured at home?

<p>Centralized Exporter (D)</p> Signup and view all the answers

In which type of MNE administrative heritage do individual host countries develop their own location-bound FSAs, with a primary focus on national responsiveness?

<p>Multi-centered MNE (A)</p> Signup and view all the answers

What is a common characteristic among all four archetypes of MNE administrative heritage?

<p>Transfer of at least some firm-specific advantages (FSAs) across borders (C)</p> Signup and view all the answers

Which of the following is an example of a non-transferable FSA?

<p>Deep knowledge of local marketing practices (A)</p> Signup and view all the answers

What is the primary focus of an International Coordinator MNE?

<p>Coordinating location advantages across multiple countries (B)</p> Signup and view all the answers

An MNE's unique way of working that is specific to a local context would be categorized as:

<p>A location-bound, non-transferable FSA. (A)</p> Signup and view all the answers

Which strategic element is most closely associated with a Multi-centered MNE approach?

<p>National responsiveness and adaptation. (B)</p> Signup and view all the answers

What is a key factor in determining the most suitable MNE administrative heritage model for a company?

<p>The nature of the company's FSAs and the characteristics of the host country. (C)</p> Signup and view all the answers

At the core of a successful international business strategy lies the:

<p>Strategic recombination of existing resources into novel configurations. (A)</p> Signup and view all the answers

Firm-Specific Advantages (FSAs) are best understood as the result of combining which elements?

<p>Stand-alone resources, established routines, and effective recombination skills. (B)</p> Signup and view all the answers

In the FSA pyramid, Location Advantages (LAs) of the home country form the:

<p>Foundation, upon which location-bound and non-location-bound FSAs are built. (A)</p> Signup and view all the answers

Multinational Enterprises (MNEs) entering a host country initially face a disadvantage primarily due to:

<p>Additional costs arising from cultural, economic, institutional, and spatial distances. (D)</p> Signup and view all the answers

To effectively compete in a foreign market, an MNE must leverage which type of Firm-Specific Advantages (FSAs) to overcome the inherent disadvantages of operating abroad?

<p>Non-location-bound FSAs, transferable and valuable across borders. (C)</p> Signup and view all the answers

When facing trade barriers in a foreign market, an MNE might choose to transfer FSAs abroad as 'intermediate products'. This strategy primarily aims to:

<p>Circumvent trade barriers and maintain market access. (A)</p> Signup and view all the answers

In international business, external actors or network partners can enhance an MNE's foreign market position by:

<p>Adding their own complementary resources to fill the MNE's resource gaps. (B)</p> Signup and view all the answers

A paradox exists concerning easily codifiable knowledge as an FSA because while transfer costs are low, its potential value might also be limited due to:

<p>The ease with which competitors can imitate and replicate this knowledge. (D)</p> Signup and view all the answers

Tacit knowledge is considered a key source of competitive advantage for MNEs in foreign markets primarily because it is:

<p>Difficult for competitors to imitate, despite being costly and time-consuming to transfer. (A)</p> Signup and view all the answers

Which of the following strategies exemplifies an MNE seeking efficiency by locating production near customers?

<p>Establishing manufacturing plants in various regions to reduce transportation costs and improve responsiveness to local demand. (B)</p> Signup and view all the answers

Which of the following is a critical aspect of value creation through recombination for an MNE?

<p>Combining existing resources with newly accessed ones, including the willingness to let go of less valuable assets. (B)</p> Signup and view all the answers

An MNE is considering entering a host country primarily to produce goods for export to other countries, not for sale within the host country or its home country. What type of MNE activity is this?

<p>Export platform MNE activity (C)</p> Signup and view all the answers

An MNE possesses a unique technology developed in its home country that can be applied globally without modification. Which FSA development pattern does this exemplify?

<p>An internationally transferable FSA developed in the home country. (D)</p> Signup and view all the answers

For recombination to be successful, what element needs to be present?

<p>Entrepreneurial skills possessed by managers which can be deployed when new opportunities arise. (D)</p> Signup and view all the answers

A company possesses an entrepreneurial potential (recombination capability). Which of the following factors would MOST significantly hinder its direct transfer to a new international market?

<p>The difficulty of adapting the potential to a different context. (D)</p> Signup and view all the answers

When a company internationalizes, which of the following is the MOST critical challenge it faces concerning Firm-Specific Advantages (FSAs)?

<p>Developing FSAs that can be effectively transferred and leveraged across borders. (A)</p> Signup and view all the answers

To successfully leverage transferable Firm-Specific Advantages (FSAs) in a host country, firms need to:

<p>Build on and integrate host country location advantages. (D)</p> Signup and view all the answers

What is the PRIMARY difference between 'generic' and 'firm-specific' location advantages?

<p>Generic advantages are accessible to all firms, while firm-specific advantages are unique to a particular firm. (A)</p> Signup and view all the answers

How do location advantages contribute to the development of Firm-Specific Advantages (FSAs)?

<p>By providing a foundation upon which firms can build unique capabilities and resources. (B)</p> Signup and view all the answers

What is the MOST important factor when assessing the strengths of a particular location for business operations?

<p>The strengths relative to those of other potential locations. (A)</p> Signup and view all the answers

Foreign Direct Investment (FDI) is characterized by which of the following?

<p>Resource allocation by a Multinational Enterprise (MNE) in a host country, retaining strategic control. (C)</p> Signup and view all the answers

A company establishes a manufacturing plant in a foreign country to take advantage of lower labor costs. Which FDI motivation does this exemplify?

<p>Natural Resource Seeking (C)</p> Signup and view all the answers

A multinational corporation acquires a technology firm in another country to gain access to cutting-edge research and development capabilities. Which FDI motivation is MOST evident in this scenario?

<p>Strategic Resource Seeking (D)</p> Signup and view all the answers

What distinguishes strategic resource seeking from natural resource seeking as motivations for Foreign Direct Investment (FDI)?

<p>Strategic resource seeking focuses on resources not generally accessible, often obtained through acquisitions, while natural resource seeking involves more readily available resources. (D)</p> Signup and view all the answers

Flashcards

International Business (IB)

The interaction between a firm and its foreign host country.

Unique Resources

Distinctive assets that give firms a competitive edge.

FSAs (Firm-Specific Advantages)

Strengths of a firm that allow it to outperform competitors.

Entry Modes

Strategies for entering new markets, such as alliances or mergers.

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Routines

Stable patterns of actions that utilize resources effectively.

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Location Advantages

Benefits derived from the geographical and cultural setting of a firm.

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Knowledge Types

Different forms of knowledge necessary for operations: upstream, downstream, and administrative.

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Recombination of Resources

Combining existing resources into new configurations to create value.

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Firm Specific Advantages (FSA)

Unique strengths a firm possesses that help it compete effectively.

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Location Advantages (LAs)

Benefits derived from the geographical location of a firm.

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Multinational Enterprises (MNE)

Firms operating in multiple countries to create value.

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Non-Location Bound FSAs (NLB)

Firm advantages that can be utilized anywhere, not tied to a specific location.

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Tacit Knowledge

Knowledge that is difficult to transfer or codify, often gained through experience.

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Codifiable Knowledge

Knowledge that can be easily written down and shared.

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Competitive Advantage

An edge a firm has over its competitors, allowing it to generate greater sales or margins.

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Exploit FSAs

Utilizing firm-specific advantages to enhance market position.

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Centralized Exporter

A firm that seeks markets with FSAs as final products, primarily operating from home.

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International Projector

A firm that replicates home operations abroad, taking only transferable FSAs without local adaptation.

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International Coordinator

A firm that utilizes transferable FSAs to coordinate operations across countries for efficiency.

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Multi-centered MNE

A multinational enterprise with localized FSAs in each host country, allowing for tailored strategies.

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Location Bound FSAs

Firm-specific advantages that are developed within a particular location and not easily transferred.

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Transferable FSAs

Firm-specific advantages that can be easily transferred to foreign markets.

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Non-transferable FSAs

Firm-specific advantages that cannot be easily moved or adapted for foreign markets.

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Host Country Location Factor

The specific advantages and characteristics of a country that affect business operations.

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Global Value Chain

A network of specialized operations across borders that adds value at each step.

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Archetypes of Administrative Heritage

The four models (Centralized Exporter, etc.) that define a firm’s international management style.

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Entrepreneurial potential

The capability of a firm to recombine resources creatively for success.

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FSA (Firm Specific Advantage)

Unique advantages held by firms, making them competitive in foreign markets.

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Host country

A foreign nation where a multinational enterprise (MNE) operates.

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Foreign direct investment (FDI)

Investment made by a firm in one country directly in business operations in another.

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Natural resource seeking

The motivation to seek physical, financial, or human resources in foreign markets.

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Market seeking

The pursuit of customer bases in foreign countries to enhance sales.

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Strategic resource seeking

The desire to acquire advanced resources not commonly accessible, often via mergers.

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Fit between FSA and location advantages

The alignment necessary for transferring FSAs effectively to a host country.

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Efficiency Seeking

The goal of exploiting environmental changes to reduce costs and enhance operations in MNE networks.

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Export Platform MNE Activity

Investment and production in a host country primarily to sell in third markets, not the parent or host markets.

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Value Creation through Recombination

Growth by innovating through combining existing and new resources, involving letting go of less valuable resources.

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Internationally Transferable FSA

A firm-specific advantage developed at home that can be used internationally without adaptation.

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Study Notes

International Business Strategy

  • IB is concerned with the relationship between a firm and a new host country's environment. Each firm has unique characteristics that make it competitive

Types of Activities

  • Efficiency seeking: Firms look for resources (e.g., natural resources)
  • Market seeking: Businesses target new markets
  • Strategic asset seeking: Firms seek specific knowledge or assets
  • Location Decisions: These are multidimensional, considering geographical, institutional, and cultural factors

Effects of Activities

  • Impact on home and host country economies and societies. Includes competition effects and spillover effects.

Firm Resources

  • Physical Resources: Natural resources, buildings, plant equipment
  • Financial Resources: Equity and borrowed capital
  • Human Resources: Individuals, operational skills, entrepreneurial skills
  • Upstream Knowledge: Product and process-related knowledge
  • Downstream Knowledge: Marketing, sales, distribution, after-sales service
  • Administrative Knowledge: Organizational structure, culture, systems
  • Reputational Resources: Brand name, reputation for honest dealings

Resource Routines

  • Routines are repeated patterns of decisions and actions used to utilize resources effectively, domestically and internationally; these are key to competitive advantage.
  • Re-combining existing resources in new ways is crucial to international business success.

Firm-Specific Advantages (FSAs)

  • FSAs are distinctive strengths of firms that give them a competitive edge, particularly in comparison to rivals; FSAs stem from the knowledge held by firms.
  • They stem from unique combinations of resources and routines.
  • FSAs differentiate firms from competitors and form the basis for a firm's competitive advantage.
  • FSAs may be location-bound (dependent on a certain location) or internationally transferable (useful across locations).

MNE Archetypes

  • Centralized Exporter: Market-seeking, standardized products, main FSA is final product
  • International Projector: Clones home operations, no new FSAs are developed
  • International Coordinator: Main transferable FSA is ability to coordinate location advantages across multiple countries.
  • Multi-Centered: Each host country develops location-bound FSAs.

Non-Transferable FSAs

  • These FSAs are difficult to transfer and exploit in foreign markets, and frequently stem from a deep knowledge of local markets or best practices.
  • They're often firm-specific and locally unique.

Complementary Resources

  • Some components may be missing, and these can be provided by external actors.

Bounded Rationality

  • Managers face constraints when making decisions due to limited information and cognitive capabilities. This limits their ability to process all available information.

Bounded Reliability

  • Refers to the limitations in fulfilling promises due to incomplete information assessment (both present and future problems).

Foreign Direct Investment (FDI)

  • FDI is the allocation of resources by a multinational enterprise (MNE) to operate in a foreign country, where the MNE retains strategic control over the activity.

Value Creation through Recombination

  • Value is created by combining existing firm resources with newly acquired resources. Innovation and diversification of operations contribute to value creation.

Location Advantages

  • These are the strengths of a specific location, which firms can use to their advantage when operating in that location; these may help the firm develop new FSAs.

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International Business Final 2018 Past Paper PDF

Description

Test your knowledge of international business strategies. Questions cover firm-host country relationships, multinational enterprise decisions, and firm-specific advantages. Assesses motivations for international expansion and entry modes.

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