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END-OF-CHAPTER GUIDE
*Review Questions and Answers
*Critical Discussion Questions and Answers
*Global Action
*Closing Case
REVIEW QUESTIONS AND ANSWERS
1. The pressure to reduce costs is common to both domestic and international competition,
but what additional kind of pressure is unique to international competition?
What is unique in international competition is the pressures for local responsiveness,
2. Referring to Figure 13.1, describe the four strategic choices and the four corresponding
organizational structures in the integration-responsiveness framework.
The four strategic choices are as follows:
Home replication strategy: a strategy that emphasizes the duplication of home
Global standardization strategy: a strategy that focuses on development and
Localization (multidomestic) strategy: a strategy that focuses on a number of foreign
Transnational strategy: a strategy that endeavors to be cost efficient, locally
International division (home replication strategy): an organizational structure that
Global product division (global standardization strategy): an organizational
Geographic area structure (localization strategy): an organizational structure that
Global matrix (transnational strategy): an organizational structure often used to
List three examples of how formal and informal external institutions affect MNEs.
The important thing is not so much the answer as the extent to which the student
demonstrates thought in providing the answer.
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Chapter 13: Strategizing, Structuring, and Learning Around The World
3. Describe some of the informal rules of the game that govern what type of individual an
MNE can appoint to be the head of a foreign subsidiary.
Given the lack of formal regulations, MNEs essentially can have three choices: A home
country national as the head of a subsidiary (such as an American for a subsidiary of a
4. Summarize the insights revealed by using a VRIO framework to analyze a potential
structural change.
Value: when making structural changes, whether the new structure (such as matrix)
Rarity: certain strategies or structures may be in vogue at one point in time. When
Imitability: formal structures are easier to observe and imitate than informal
5. In your opinion, what type of knowledge is more important to an MNE—explicit or tacit?
Why?
Explicit knowledge can be codified and written but not so with tacit knowledge that
requires experience and learning by doing. Opinions will vary. Students who hope to
6. How is knowledge developed and disseminated in each of the four types of MNEs?
Differences in knowledge management among the four types of MNEs fundamentally
stem from the interdependence (1) between the headquarters and foreign subsidiaries and
(2) among various subsidiaries.
Home replication strategy: interdependence is moderate, and the role of subsidiaries
Localization strategy: the interdependence is low. Knowledge management centers on
Global standardization strategy: the interdependence is increased. Knowledge is developed and
retained at the center and a few centers of excellence. Consequently, there is an extensive flow of
knowledge and people from headquarters and these centers to other subsidiaries.
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Chapter 13: Strategizing, Structuring, and Learning Around The World
7. ON CULTURE: Name one problem with a global virtual team and how you would solve
the problem. How would cultural differences make the problem worse?
Global virtual teams: teams that do not meet face to face to transfer knowledge.
8. What are some of the actions that MNEs can take to combat common problems in
knowledge management?
Corporate headquarters can manipulate the formal rules of the game, such as (1)
tying bonuses to measurable knowledge outflows and inflows, (2) using
MNEs often have to rely on a great deal of informal integrating mechanisms, such as
(1) facilitating management and R&D personnel networks among various
9. Which do you think would be more integral to a firm’s success: corporate controls or
subsidiary-level strategies and agendas?
Subsidiary initiatives may inject a much-needed spirit of entrepreneurship throughout the
10. Describe the two primary customer-focused dimensions that many MNEs add to their
global matrix structures.
Global account structure: a customer-focused dimension that supplies customers (often
other MNEs) in a coordinated and consistent way across various countries.
From time to time, a manager may be faced with the need to change the internal rules of the
game within his or her MNE. What skills and capabilities might be useful in achieving this?
As an MNE becomes more global in its operations, its managerial outlook needs to be
11. What is your interpretation of the phrase “Think global, act local”?
The important thing is not so much the answer as the extent to which the student
demonstrates thought in providing the answer. It should be noted that those who think
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Chapter 13: Strategizing, Structuring, and Learning Around The World
12. After reviewing PengAtlas Map 2.1, in your opinion, how do you explain why most of
the top ten exporters are also among the top ten importers?
In order to export outputs, firms may need to import inputs. Also, as trade theory
13. After comparing PengAtlas Map 2.1 and 2.2, in your opinion, why are most of the ten on
2.1 also on 2.2?
Although we may distinguish output in terms of physical products and services, often one
CRITICAL DISCUSSION QUESTIONS AND ANSWERS
1. In this age of globalization, some gurus argue that all industries are becoming global and
that all firms need to adopt a global standardization strategy. Do you agree? Why or why
not?
Answers may vary but even if all firms need a global strategy, that does not mean that the
2. ON ETHICS: You are the manager of the best-performing subsidiary in an MNE.
Because bonuses are tied to subsidiary performance, your bonus is the highest among
managers of all subsidiaries. Now headquarters is organizing managers from other
subsidiaries to visit and learn from your subsidiary. You are worried that if performance
at other subsidiaries improves, then your subsidiary will no longer be a star unit and your
bonus will go down. What are you going to do?
This is a question in which the answer is not as important as the thought process and the
3. ON ETHICS: You are a Peruvian national who serves as head of the Brazilian subsidiary
of a large US multinational. While Brazil is theoretically attractive, the going has been
tough and chances for becoming profitable in the next five years are not great.
Headquarters has asked for your recommendation on whether to increase or decrease
investment in Brazil. If a decision to cut investment in Brazil is indeed made, it is
possible to focus on other Latin American countries, such as Peru. Since your parents are
aging, you personally would be interested in leading operations in Peru so that you can be
closer to them. What would be your recommendation?
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Chapter 13: Strategizing, Structuring, and Learning Around The World
GLOBAL ACTION
1. Currently, considerable growth has been documented in Latin American and Caribbean
economies. Based on the specific regulations in each country, part of your company’s
strategy in the Western Hemisphere is to ensure that contracts made by the firm are
agreed to and abided by in all business dealings. Since your company has sales offices in
every Latin American and Caribbean economy, where should your company focus first?
Provide detailed justification for your choices.
Exercise 1 Answers
One resource which can be used is “World Bank: Doing Business”. This website can be
found by entering the search term “World Bank Doing Business” at the globalEDGE™
2. To remain competitive, a multinational steel company needs to reconfigure its operations
to align with worldwide production. As a consultant on world steel production, provide a
report that indicates appropriate personnel and resource allocation to each region of the
world. As a part of your analysis, be sure to include your analysis for specific countries in
which your client should maintain regional headquarters.
Exercise 2 Answers
One resource which can be used is “worldsteel Association”. This website can be found
by entering the search term “world steel” at the globalEDGE™ Resource Desk search
CLOSING CASE DISCUSSION GUIDE AND ANSWERS
Subsidiary Initiative at LEGO North America
1. What did LEGO North America do when corporate headquarters rejected its initial ideas?
Unfortunately, LEGO senior executives’ initial reaction, according to Eio himself, “was
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Chapter 13: Strategizing, Structuring, and Learning Around The World
Ole Kirk Christiansen’s core values: never let war seem like child’s play. According to
2. Why do most multinational headquarters not pay sufficient attention to ideas from
subsidiaries?
3. What are the lessons we can draw from the successful pushing of one subsidiary initiative
in this case? What are the do’s and don’ts?
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