Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam

Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam 1 / 4

Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam 2 / 4

Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam Global Business Summary by Sterre Mouws

Chapter 1: Expanding Abroad

The MNE: Definition, Scope and Influence

Definition – A multinational enterprise has a substantial direct investment in foreign countries, and be engaged in the active management of these offshore assets rather than simply holding them in a passive investment portfolio.Scope – In 1973 an MNE was one which controls assets, factories, mines, sales offices, and the like in two or more countries.In 1984 an MNE was an enterprise which comprises entities in two ore more countries, operates under a system of decision making centers, and entities are so linked by ownership or otherwise that one or more of them may be able to exercise a significant influence over the activities of others.The active, coordinated management of operations located in different countries is a key differentiating characteristic of an MNE.MNE Influence in the Global Economy – MNE’s have considerable influence on the global economy, employ a high percentage of business graduates, and pose the most complex and strategic and organizational challenges for their managers.

The Motivations: Pushes and Pulls to Internationalize

Traditional Motivations – the earliest motivations that drove companies to invest abroad was the need to secure key supplies.Another strong trigger could be described as market-seeking behaviour (firms with some intrinsic advantage).Important trigger for internationalisation was the desire to access low-cost factors of production. The ways in which thse motives interacted to push companies to become MNEs are captured in the cycle theory – which suggests that the starting point for internationalization process is typically an innovation that a company creates in its home country. First phase firms typically establish an export unit within the home office to oversee the growing export levels. As the product matures and production processes become standardized, the company enters the second stage, the firm typically sets up production facilities in the importing countries. Finally, in the third stage, the product becomes highly standardized, and many competitors enter the business, competition focuses on price and therefore on cost.Emerging Motivations – Secondary set of motivations that underlay their emerging global strategies.Increasing scale economies, ballooning R&D investments and shortening product life cycles that transferred many industries into global rather than national structures and made a worldwide scope of activities not a matter of choice, but an essential prerequisite for companies to survive. Global scanning and learning capability, a huge informational advantage that could result in its location more efficient sources. Competitive positioning also leverage that foreign investments provided over competitors.

The Means of Internationalization: Prerequisites and Processes

Prerequisites for Internationalization – There are three conditions that must be me for the existence of an MNE. There must be foreign countries that offer certain local-specific advantages to provide the requisite motivation for the company to invest there.The company must have some strategic competencies or ownership-specific advantages to counteract the disadvantages of its relative unfamiliarity with foreign markets.It must possess some organizational capabilities to achieve better returns from leveraging it strategic strengths internally, rather than through external market mechanisms such as contracts or licences. 3 / 4

Summary transnational management bartlett 9th edition 2024 9781009488587 test bank questions exam Process of Internationalization – Learning model of internationalization (Uppsala model) – The company makes an initial commitment of resources to the foreign market, and through this investment, it gains local market knowledge about its customers, competitors and regulatory conditions. On the basis of this market knowledge, the company is able to evaluate its current activities, the extent of its commitment to the market, and thus its opportunities for additional investments. It then makes a subsequent resource commitment, which allows it develop additional market knowledge.Approaches to Foreign Market Entry – Based on amount of resources committed to foreign market (horizontal) and level of control over foreign activities (vertical.

The Evolving Mentality: International to Transnational

International Mentality – Earliest stage of internationalization. Derives directly from the international product cycle theory. Products are developed for the domestic market and only subsequently sold abroad; technology and other sources of knowledge are transferred from the parent company to the overseas operator; and offshore manufacturing represents a means to protect the company’s home market.Multinational Mentality – develops as managers begin to recognize and emphasize the differences among national markets and operating environments. Adopt a more flexible approach to their international operations by modifying their products, strategies and even management practices country by country. Considerably independent from headquarters.Global Mentality – views the world as its basic unit of analysis. The underlying assumption that national tastes and preferences are more similar than different, or can be made more similar by providing customers with standardized products at adequate costs and with quality advantages over those national varieties that they know.Transnational Mentality – an approach to worldwide management. Key activities and resources are neither centralized in the parent company nor so decentralized that each subsidiary can carry out it own tasks on a local-for-local basis. The resources and activities are dispersed but specialized, to achieve efficiency and flexibility at the same time. These dispersed resources are integrated into an interdependent network of worldwide operations.Reading 1 – 2 Distance Still Matters: The Hard Reality of Global Expansion Distance between two countries can manifest itself along four

basic dimensions: cultural, administrative, geographic, and economic.

Cultural Distance – a country’s cultural attributes determine how people interact with one another and with companies and institutions. Most often, cultural attributes create distance by influencing the choices that consumers make between substitute products because of their preferences for specific features. Sometimes products can touch a deeper nerve, triggering associations related to the consumer’s identity as a member of a particular community.Administrative or Political Distance – historical and political associations between shared by countries greatly affect trade between them. Preferential trading arrangements, common currency, and political union can also increase trade by more than 300 % each.Countries can also create administrative and political distance through unilateral measures. Protect domestic markets if the domestic company is either; a large employer, seen as national champion, vital to national security, produces staples, produces and entitlement good or service, exploits natural resources, involves high sunk-cost commitments.Geographic Distance – not simply a matter of how far away the country is in miles or kilometres. Physical size of the country, average within-country distance, access to waterways and the ocean, and topography. Also transportation and communication infrastructure. Products with low value-to-weight or bulk ratios high costs as geographic distance increases. Fragile of perishable products become significant across large

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