Chapter 2
Understanding the international context:
Responding to conflicting environmental forces
True/False
1. MNEs from emerging markets seem to be more poorly equipped to compete in other
emerging markets when compared to their counterparts from developed markets.
2. The three conflicting environmental forces that MNEs encounter are cross-market
integration, national responsiveness, and worldwide innovation and learning.
3. Global integration and coordination forces encountered by MNEs include economies of
scale, government demands, and the expanding spiral of globalization.
4. Local responsiveness forces encountered by MNEs include cultural differences, government
demands and economies of scope.
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5. Worldwide innovation and learning forces that are encountered by MNEs are driven by
factor costs.
6. A global industry is characterized by low national responsiveness and high global
integration.
7. A multinational industry is characterized by low national responsiveness and high global
integration.
8. An international industry is characterized by low national responsiveness and moderate
global integration.
9. A transnational industry is characterized by moderate national responsiveness and moderate
global integration.
10. The search for global competitiveness is a major source of conflict between MNEs and host
governments.
11. A firm’s decision with respect to whether it should adopt a global, multinational or
international strategy should be made without any consideration of the industry in which the
firm operates.
12. In the emerging international environment, most industries can be categorized as
multinational, global or international.
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13. Globalization is a phenomenon that took most industries by surprise.
14. Ricardo’s free trade theory of competitive advantage states: if each country specializes in
areas of advantage, and trades with other countries for the products/services in which they
specialize, there is an overall loss for each country.
15. The GLOBE study demonstrates how distinct cultural differences across countries result in
wide variations in social norms and individual behavior and is reflected in the effectiveness
of different organizational forms and management systems.
16. In 2016, attitudes toward free trade in some countries swung in the direction of greater
protectionism.
Multiple Choice
17. What were the original four dimensions of Hofstede’s research?
a. Power distance, uncertainty avoidance, long-term orientation, and “masculinity”
b. Power distance, uncertainty avoidance, individualism, and “masculinity”
c. Power distance, long-term orientation, indulgence, and uncertainty avoidance
d. Indulgence, uncertainty avoidance, individualism and “masculinity”
18. Which global integration and coordination forces would MNEs, such as Mercedes-Benz,
encounter?
a. Economies of scale, increasingly liberalized trade environments and government demands
b. Economies of scope, factor costs and increasingly liberalized trade environments
c. Economies of scale, expanding spiral of globalization and local competitors
d. Economies of scale, economies of scope and government demands
19. Philips, a multinational electronics corporation based in the Netherlands and diversified in
the consumer electronics, domestic appliance, lighting, medical systems and medical
technology industries would encounter the following forces of local responsiveness:
a. Cultural differences, government demands, and economies of scope
b. Cultural differences, government demands and factor costs
c. Cultural differences, government demands, and local competitors
d. Cultural differences, government demands, and increasingly liberalized trade environments
20. The pressures that drive book publishers such as Cambridge University Press to integrate and
coordinate their activities across national boundaries are primarily _________.
a. Economic
b. political
c. social
d. organizational
21. What are the main forces that motivate MNEs such as Dell Computers to disaggregate their
operations and activities to respond to national, regional and local needs and demands?
a. Social and economic forces.
b. Social and political forces.
c. Political and economic forces.
d. Economic and psychological forces.
22. What are the main forces that drive MNEs such as Eli Lilly, the pharmaceutical company, to
innovate and learn on a global scale?
a. Economic and political forces.
b. Political and social forces.
c. Social and informational forces.
d. Technological and informational forces.
23. An industry that is characterized by low national responsiveness and high global integration
is a(n)
a. multinational industry.
b. global industry.
c. international industry.
d. transnational industry.
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24. A multinational industry is characterized by ____________.
a. low national responsiveness and low global integration
b. low national responsiveness and high global integration
c. high national responsiveness and low global integration
d. high national responsiveness and high global integration
25. An industry that is characterized by moderate national responsiveness and moderate global
integration is a(n)
a. international industry.
b. global industry.
c. transnational industry.
d. multinational industry.
26. A transnational industry is characterized by _____________.
a. low national responsiveness and low global integration
b. low national responsiveness and high global integration
c. high national responsiveness and low global integration
d. high national responsiveness and high global integration
27. In a transnational industry, MNEs are expected to
a. collaborate with their competitors to increase the prices of their products.
b. build the capability to learn from the many environments in which they operate.
c. acquire their competitors to increase their pool of resources.
d. decentralize decisions to better respond to local demands.
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28. Kentucky Fried Chicken (KFC) suffered a major chicken sales decrease in Hong Kong
immediately after running the Chinese version of their successful worldwide advertising
campaign “Finger lickin’ good” that supposedly highlights the tastiness of their chicken. This
is most likely an issue of:
a. Cultural differences and localization pressures
b. Government demands and factor costs
c. Localization pressures and economies of scale
d. Cultural differences and global competition
Essay
29. Apple is a U.S. MNE. Briefly describe three conflicting sets of external demands that its
international operations might face.
30. Briefly describe the global integration and coordination forces encountered by MNEs.
31. Briefly describe the local differentiation and responsiveness forces encountered by Samsung,
a multinational electronics and home appliances manufacturer and retailer.
32. Briefly describe the worldwide innovation and learning force that Microsoft encounters.
33. Explain (1) what is meant by ‘global chess’ and (2) why companies that are adept at playing
global chess have an advantage over their competitors.
34. Briefly discuss whether the type of industry a company belongs to affects that company’s
decision to adopt an international, multinational, or global strategy. Explain why you believe
35. Interactions between host governments and MNEs have been sometimes compared to love-
hate relationships. Could you please explain both parts of this equation and how host
governments and MNEs relationships have evolved in the 2010s?
36. Discuss how cultural differences can have an effect on the consumption of tea worldwide.
37. Free Trade agreements have become a topic of discussion recently. How would you approach
a discussion with your next door neighbor who thinks that Free Trade agreements are the
reason for job losses?