Chapter 1 - 3

The CEO of Paragon Ltd. wants to take his company international. What are the three big questions he must answer before expanding abroad?

• What market opportunities, sourcing advantages, or strategic imperatives will motivate the company’s international expansion?

• How will the company expand its foreign presence – through exports, licensing, joint ventures, wholly owned subsidiaries or some other means?

• How will the mentalities – attitudes, assumptions, and beliefs – of Paragon’s management and employees impact the probability of the company succeeding in its efforts to internationalize?

• What competitive advantage, strategic types, or industry structure will decide the company’s international expansion?

What is an MNE? Give examples to explain the difference between companies that are considered MNEs and those that are not.

The demand for the Italy-based Sparkly Fashion Manufacturing’s unisex pants has been continually increasing. Sparkos, the CEO of the company, intends to take his company international by producing these unisex pants mainly in Italy and selling them in the same way all over the world. Sparkos is operating with a(n):

• multinational mentality

• global mentality

• international mentality

• transnational mentality

Three prerequisites that must be satisfied before a national firm can transform itself into a multinational firm include:

• scale-based advantages, ownership-specific advantages, and contractual capabilities

• location-specific advantages, ownership-specific advantages, and organizational capabilities.

• scale-based advantages, ownership-specific advantages, and organizational capabilities.

• location-specific advantages, knowledge advantages, and organizational capabilities.

What are the main forces that drive MNEs such as Eli Lilly, the pharmaceutical company, to innovate and learn on a global scale?

• Economic and political forces.

• Political and social forces.

• Social and informational forces.

• Technological and informational forces.

What is meant by ‘global chess’ and why companies that are adept at playing global chess have an advantage over their competitors.

A multinational industry is characterized by ____________.

• low national responsiveness and low global integration

• low national responsiveness and high global integration

• high national responsiveness and low global integration

• high national responsiveness and high global integration

List three conflicting sets of external demands that MNE might face.

The diversity of environments in which MNEs operates enables them to develop diverse capabilities and experience multiple learning opportunities.

• True

• False

Which of the following is not considered a source of global competitive advantage?

• scale economies.

• market leadership

• national differences.

• scope economies.