Multinational Manufacturing Strategies Quiz

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Questions and Answers

Which industries became prominent for multinational strategies since the late nineteenth century?

Textiles and Pharmaceuticals

Banking and Retail

Chemicals and Automobiles (correct)

Agriculture and Mining

What was unique about multinational manufacturing prior to the nineteenth century?

It only included domestic markets.

It was dominated by American firms.

There were no known cases of multinational manufacturing. (correct)

It focused primarily on textiles.

Which company is considered the first successful US multinational manufacturer?

Siemens and Halske

Singer (correct)

Ford Motor Company

General Motors

What did Siemens and Halske do to ensure independence from suppliers?

Built its own cable factory near London. Signup and view all the answers

By the end of the nineteenth century, what percentage of British exports was textiles accounted for?

Around two-fifths Signup and view all the answers

What prompted the first instances of multinational manufacturing?

The capital-intensive technologies of the Second Industrial Revolution. Signup and view all the answers

Which of the following was a focus area for multinationals predominantly after World War II?

Pharmaceuticals Signup and view all the answers

Which of these countries hosted one of the first factories established by Singer?

Scotland Signup and view all the answers

What is a primary function of cartels in international trade?

To fix export prices for one or multiple markets Signup and view all the answers

What strategy did some cartels use to manage member behavior?

Imposing fines for exceeding quotas Signup and view all the answers

In international cartels, what form did territorial division typically take?

Assigning specific regions to different member firms Signup and view all the answers

What was a common feature of agreements within the international cartel system?

Patent agreements to share know-how Signup and view all the answers

Which type of market do cartels typically reserve for their nationals?

Home markets, sometimes partially reserved Signup and view all the answers

What was a common method used to prevent cheating in cartels?

Sanctions in the form of imposed fines Signup and view all the answers

Which industry had wide-ranging cartel agreements between major companies like ICI and Du Pont?

Interwar chemical industry Signup and view all the answers

In what way did some cartels manage foreign direct investment (FDI)?

Prohibiting it in specific markets Signup and view all the answers

What shift did US chemical companies make in their raw material source during the 1950s?

From coal to petroleum Signup and view all the answers

Which US chemical company was known for concentrating on plastics and synthetic fibers during its foreign expansion?

Monsanto Signup and view all the answers

What was the primary strategy of Chrysler for its foreign investment after 1945?

Acquisition of foreign firms Signup and view all the answers

Which industry experienced unprecedented levels of foreign direct investment due to rising world incomes?

Automobile Signup and view all the answers

What factor discouraged the import of automobiles during the expansion of the auto industry?

Local content requirements Signup and view all the answers

Which of the following companies was notable for its significant FDI in petrochemicals?

BASF Signup and view all the answers

What was a common trend for German chemical companies post-World War II?

Reinvesting in previously lost Latin American plants Signup and view all the answers

Which Swiss chemical companies were known for their extensive foreign direct investment after abandoning their cartel?

Ciba, Geigy, Sandoz Signup and view all the answers

Which company had established a British factory for condensed milk in 1872?

Anglo-Swiss Condensed Milk Company Signup and view all the answers

What was a significant development for Dutch margarine companies by 1914?

They established factories in Germany and Belgium. Signup and view all the answers

What significant shift occurred during the interwar years for manufacturing firms?

They built more plants in foreign countries. Signup and view all the answers

Which countries' firms benefitted the most during World War I due to their neutral status?

Sweden, Switzerland, and the Netherlands Signup and view all the answers

What major challenge did managers face during the interwar multinational strategies?

Complex negotiations with governments Signup and view all the answers

What product categories did Nestlé initially focus on around the time before 1914?

Condensed milk and chocolates Signup and view all the answers

Which British company built soap factories in various countries between 1890 and 1914?

Lever Brothers Signup and view all the answers

By 1914, which country was noted for purchasing the entire German ball-bearing industry in the 1920s?

Sweden Signup and view all the answers

What was the focus of non-US automobile manufacturers before the 1970s?

Exports rather than direct investment Signup and view all the answers

Which of the following companies consolidated to become major players in the German automobile market?

Volkswagen, Daimler-Benz, and BMW Signup and view all the answers

How did Toyota's production system differ from the traditional mass production system?

It contracted out a large percentage of the value of a finished car to suppliers. Signup and view all the answers

By how much did Japan's share of world automobile output increase from 1960 to 1990?

From 1 percent to 25 percent Signup and view all the answers

What production strategy became associated with Toyota and was later adopted by other manufacturers?

Lean production Signup and view all the answers

Which firm focused on producing a single small car known as the Beetle?

Volkswagen Signup and view all the answers

What percentage of total Western European vehicle production did the mentioned companies control by 1973?

7.5 percent Signup and view all the answers

What significant shift occurred in the post-war automobile industry?

Japanese manufacturers emerged as successful challengers to US giants Signup and view all the answers

What was a significant factor in the ease of raising funds for British companies?

Well-developed London capital market Signup and view all the answers

How did banks influence multinational manufacturing in Continental European countries?

They facilitated financing through close ties with industries. Signup and view all the answers

What role did German capital markets play in the 1920s regarding foreign direct investment (FDI)?

They constrained FDI due to high interest rates and small market size. Signup and view all the answers

What was identified as the most important locational factor encouraging manufacturing firms to prefer FDI over exporting?

Tariffs and trade barriers Signup and view all the answers

What influence did nationalistic feelings have on foreign companies pre-1920s?

They encouraged local production to overcome government restrictions. Signup and view all the answers

How did patent legislation affect U.S. electrical FDI in Canada?

It nullified patents if not utilized within two years. Signup and view all the answers

What was a reason for GE taking shares in local electrical companies?

To acknowledge the growth of national feelings and opposition to foreign products Signup and view all the answers

What effect did outright government restrictions on foreign multinationals have before the 1920s?

They were rare and did not significantly affect FDI. Signup and view all the answers

Study Notes

Multinational Strategies and Manufacturing

Multinational strategies have been prominent in dynamic manufacturing industries since the late 19th century.
Firms from the Second Industrial Revolution rapidly expanded into international markets.
Post-World War II saw successors in industries like chemicals, electricals, machinery, automobiles, computers, pharmaceuticals, and telecommunications.

Origins and Growth of Multinationals

No multinational manufacturing existed before the 19th century.
The first examples emerged in the 1830s, with Swiss cotton firms establishing plants in southern Germany.
Mid-19th century saw more durable direct investments in manufacturing.
Siemens and Halske (a German firm) pioneered telegraph and cable equipment development in the 1850s, establishing workshops in St. Petersburg and London to install and maintain their products.
Singer, the sewing machine company, was a successful US multinational by 1914 with extensive international business operations.

Chemicals and Machinery

The late 19th century saw significant developments in the chemical industry, spurred by scientific research.
German chemical companies grew into large enterprises due to long-term research and production investments.
German firms (including Bayer, BASF, and Hoechst) were major global exporters of their products, also investing abroad.
Swiss companies like Geigy and Sandoz also engaged in early multinational chemical manufacturing.

Automobiles and Food in the Interwar Years

The automobile industry emerged in France in the late 1890s and spread throughout Europe.
European companies focused initially on small numbers of expensive cars for wealthy customers.
France's Renault, Germany's Daimler, and Italy's Fiat had early international operations.
The US saw Henry Ford and General Motors revolutionize automobile manufacturing with standardized products (Model T), moving assembly lines, and large economies of scale in production.

Branded Consumer Goods

Multinational manufacturing was also evident in branded consumer goods by 1914.
Examples include: British companies making dog food and toffee in the US, German firms producing malt coffee substitutes, and US, British, and German multinationals manufacturing gramophone machines and records across Europe.
Nestlé and Unilever had early multinational investments, producing condensed milk, baby food, and chocolates.

The Interwar Cartels

By the 1930s, international cartels controlled a significant portion of world manufacturing.
Factors such as depressed markets, political risk, and exchange controls encouraged the rise of cartels.
Cartels were prevalent in industries with a smaller number of producers, such as semi-finished products, steel, capital goods, engineering, and chemicals.

Significance of FDI by 1914

Many large multinational manufacturing enterprises operated globally by 1914.
This table shows prominent companies, their national origins, the products they produced, and the number of international factories they had.

Locational Factors

Tariffs and other nontariff barriers were significant factors encouraging FDI.
Nationalistic pressures in countries often led to support for local producers.
Patent legislation influenced the choice between exporting and FDI.
The overall size and per-capita income of markets were important locational factors, with fast-growing markets being attractive for companies to invest.

The Post-War Resurgence

Manufacturing FDI resumed from the 1950s after World War II.
International cartels were largely dismantled across many industries.
US companies became the dominant force in many sectors of multinational manufacturing and investment.

Chemicals and Automobiles

Petrochemicals rose as a new industry in the interwar years.
Initial dominance shifted to US firms that later saw European involvement.
The postwar era saw a significant expansion of global chemical markets.
The automobile industry also saw unprecedented levels of FDI. International diversification became increasingly important.

Japanese Expansion

Following World War II, Japanese manufacturers reorganized around export strategies.
Post-war Japan rapidly became a major export powerhouse, particularly in machinery and transport equipment.
The success of Japanese exports spurred various new protectionist measures in other countries.
Japanese success in the automobile sector led them to increasingly compete in the global market starting in the 1970s.

Electronics

US companies pioneered the fast-growing electronics industry. Initially, business machinery firms benefited from high wartime demand for typewriters, adding machines.
The US government played an important role in the development of electronic digital computers through funding and encouragement of research.
IBM became a dominant force in the personal computer industry, largely through outsourcing critical components such as the disk operating system and microprocessors to smaller companies (Microsoft, Intel).

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Description

Test your knowledge on the evolution and strategies of multinational manufacturing from the late 19th century to the present. Explore the key dynamics that shaped industries in the post-World War II era and the origins of multinational firms. This quiz covers historical examples and significant developments in various sectors.