Chat with AIExam 6: Entering Foreign Markets
"Location,location,location" is an important factor in many strategic decisions.What considerations are essential in assessing location of potential foreign market entry?
(36) 
VerifiedFavorable locations in certain countries may give firms operating in those countries location-specific advantages.These advantages are the benefits a firm reaps from features specific to a particular location.Certain locations simply possess geographical features that are difficult for others to match.Beyond geographic advantages,location-specific advantages also arise from the clustering of economic activities in certain locations,usually referred to as agglomeration.Location-specific advantages stem from knowledge spillovers among closely located firms that attempt to hire individuals from competitors,industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region,and industry demand that facilitates a pool of specialized suppliers and buyers to also locate in the region It is important to note that location-specific advantages may grow,change,and/or decline,prompting firms to relocate.If policy makers fail to maintain the institutional attractiveness (for example,by raising taxes)and if companies overcrowd and bid up factor costs such as land and talents,some firms may move out of certain locations previously considered advantageous.
Direct exports may work best if the export volume is small.
(34) VerifiedTrue
According to a report by Rugman and others,among the largest Fortune Global 500 MNEs,feware truly "global." What does this statement mean and what does it take to be global?
(29) VerifiedThe implication is that many global corporations are not truly global because they do not obtain at least 20% of their sales in each of the three Triad regions: Asia,Europe,and North America.This view is focused on the meaning of words,and most so-called global corporations are focused on profit objectives.There are reasons why an MNE may not be truly global.First,most MNEs know what they are doing in regards to achieving their profit objectives,and their current geographic scope is the maximum they can manage in the most profitable manner.Second,globalization is a trend and many will likely become more "globalized" over time,although recent data show no major changes.The lesson? Be careful when using the word "global." The majority of the largest MNEs are not necessarily very "global" in their geographic scope.
The superb value of firm-specific resources and capabilities results in foreign entrants being:
(44) The large size of the domestic market is the main reason firms go abroad.
(30) In order to be successful in foreign markets,it is necessary for a firm to match its efforts in market entry and geographic diversification with its strategic goals.
(38) Firms that face high dissemination risks are more likely to choose against entering a foreign market.
(32) The differences in formal and informal institutions that govern the rules of the game in different countries include _______ differences.
(33) The liability of foreignness is the inherent disadvantage foreign firms experience in host countries because of their nonnative status.
(32) Discussion of strategies for MNEs focuses on growth and global expansion.Under what circumstances can downsizing and withdrawing from countries make sense? Why might some firms fail to withdraw or downsize?
(31) MNEs that enter foreign markets through foreign direct investment do not have OLI advantages.
(32) In an obsolescing bargain,an MNE receives greater incentives from a foreign government after entering that market.
(34) The bargaining power of suppliers may prompt backward vertical integration.
(33) An emerging MNE's ability to identify and bridge gaps is known as location advantage.
(29) 
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