Multinational Corporations Strategy

Adam Smith (1723 - 1790) is known for his work The Wealth of Nations (1776) . He is also known as ? and invented what theory of economics ?

• Father of Liberalism & Theory of Comparative Advantage

• Father of Capitalism & Theory of Absolute Advantage

• Father of Liberalism & Theory of Absolute Advantage

• Father of Capitalsim & Theory of Comparative Advantage

Answer explanation

Adam Smith is often known as the Father of Capitalism / Father of Economics.

He pioneered the theory of Absolute Advantage.

In Wealth of Nations, Smith opposed the mercantilist state of the eighteenth century, established on the principle that the nation is best served when state power is used to create wealth and national security.

He also believes that in order to increase the wealth of nations, countries should specialize in producing goods and services that they have an absolute advantage and engage in free trade with other countries.

For Smith individual freedom in the marketplace leads to an efficient allocation of resources and helps reduce potentially abusive state power. Hence, he is often known as the father of capitalism which replaced state feudalism. This efficiency also maximizes potential wealth through absolute advantage.

Adapted from:

Balaam, D. N., & Dillman, B. L. (2019). Introduction to International Political Economy. Routledge.

Bondarenko, P. (2018, May 14). absolute advantage. Encyclopedia Britannica. https://www.britannica.com/topic/absolute-advantage

advantage trade practices.

John Locke (1632 - 1704) is a British Philosopher and Physician. He is known as one of the most influential thinkers that has shaped the world today. He is also known as?

• Father of Capitalism

• Father of Liberalism

• Father of Modern Lingustics

• Founder of Stoicsm

Answer explanation

John Locke's ideas on quality, individual rights, and the role of the state helped lay the foundation for modern societies. It has influenced thinkers like Voltaire and Jean-Jacques Rousseau.

The title of Father of Capitalism falls to Adam Smith.

The title of Father of Moden Linguistics falls to Noam Chomsky

The founder of Stoicism was Zeno of Citium

Adapted from:

Mack, E. (2020, June 24). The Essential John Locke. Fraser Institute. Retrieved June 5, 2022, from https://www.fraserinstitute.org/studies/essential-john-locke#:%7E:text=The%20Essential%20John%20Locke%20is,the%20foundation%20for%20modern%20societies.

In 1979, Michael Porter proposed Porter's Five Force Analysis which in essence is a strategy formulation to cope against the competition.

What is not the five forces that determine the competitiveness, thus profitability of a company?

• Threat of entry

• Threat of complementary goods

• Bargaining power of customers

• Bargaining power of suppliers

• Competitive rivalry

Answer explanation

Here are following five forces in Porter's Five Force Analysis:

1. Threats of New Entrants

2. Threats of Substitutes

3. Bargaining Power of Customers

4. Bargaining Power of Suppliers

5. Competitive Rivalry.

Adapted from:

Porter, M. E. (2022, April 11). How Competitive Forces Shape Strategy. Harvard Business Review. Retrieved June 5, 2022, from https://hbr.org/1979/03/how-competitive-forces-shape-strategy

In 1994, John Elkington coined the term “triple bottom line". In which he calls for business leaders to rethink capitalism. It is divided into three namely People, Planet, and Profit. What was the purpose?

• It is a sustainability framework that examines a company’s social, environment, and economic impact.

• It is a framework to maximize company the profits made by exploting people and the planet.

• It aims to ensure that that the people could always make profit by exploiting the planet as much as possible.

• It is just another jargon for anti-capitalism activist

Answer explanation

The triple bottom line is a business concept that posits firms should commit to measuring their social and environmental impact—in addition to their financial performance—rather than solely focusing on generating profit, or the standard “bottom line.” It can be broken down into “three Ps”: profit, people, and the planet.

John Elkington coined the term “triple bottom line” as a challenge for business leaders to rethink capitalism. It was supposed to offer a radical new way forward, as businesses learned to stop focusing solely on profits and expand their focus to include improving the lives people and the health of the planet.

Adapted from:

Elkington, J. (2018, September 13). 25 Years Ago I Coined the Phrase “Triple Bottom Line.” Here’s Why It’s Time to Rethink It. Harvard Business Review. Retrieved June 5, 2022, from https://hbr.org/2018/06/25-years-ago-i-coined-the-phrase-triple-bottom-line-heres-why-im-giving-up-on-it

Miller, K. (2020, December 8). The Triple Bottom Line: What It Is & Why It’s Important. HBS Online | Business Insights Blog. https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line#:%7E:text=The%20triple%20bottom%20line%20is,%3A%20profit%2C%20people%2C%20and%20the

Which one is not an MNC?

• 
• 
• 
• 

What is Disaster Capitalism?

• An MNC as an actor where did not improving of the surrounding but rather creates more harm

• An MNC as an actor where they use an disaster to gather more profits

• An MNC as an actor where they survive in a capitalism mistake

• An MNC as an actor surviving the on an disaster then started an capitalism

Answer explanation

Disaster capitalism is a situation where MNC as an actor did not improve the quality of its surrounding environment or social society, but rather caused harm and conflict or issue within the community.

Why Corporate Social Responsbility (CSR) practices must be surveilled and monitored?

• To prevent corruption or bribery on the local government

• To prevent any programs that are on the CSR standard

• To make the company create more money

• Not letting people getting away from the programs

Answer explanation

(CSR) practices also need to be surveilled and monitored. As many CSRs are often used by MNCs as a method of bribery local government officials. Furthermore, even if MNCs have good intentions with their CSR programs, without monitoring, MNC could not tell if their programs actually worked or if someone within the MNCs as embezzle the funds allocated for CSR.

Which company here are not the example of the international bribery?

• Siemens

• Elf

• Volkswagen Group

• Statoil ASA

Which ONE of the following is A MARKET ACTOR?

• Local Government Officials

• Media Industry

• Financial Institution

• NGOs

In 1979, John H. Dunning introduced the concept of OLI / Eclectic Paradigm which introduces three aspects that a firm should view prior to their expansion. What were they?

• Internationalization

• Internalization

• Ownership

• Location