Exam 11: Global Strategy and the Multinational Corporation

Internationalization tends to increase competition by increasing overseas firms entering and building capacity in domestic markets and increasing the diversity of competitors within each national market. +]

Switzerland's comparative advantage in clocks and watches is likely to reflect national demand characteristics (e.g.the Swiss emphasis on punctuality)rather than national resource endowments.

The costs of national differentiation can be low if:

Global industries are those where:

In general,internationalization of an industry results in more competition and lower profitability

Pankaj Ghemawat's "CAGE framework," which analyzes the cultural,administrative and political,geographical,and economic differences between countries,can help firms adapt their strategies to the particular characteristics of a foreign market .

A firm would be unwise to pursue a global strategy if global scale does not confer cost advantage,

In pharmaceuticals (where patent protection tends to be strong),exports or direct foreign investment will tend to be preferred over licensing as a means of exploiting overseas markets.

The declining performance of multinational corporations (MNCs)relative to nationally-focused firms suggests that,for many MNCs,the costs of reconciling the benefits of aggregation,arbitrage,and adaptation may exceed the benefits.

Internationalization among New York-based law firms is the result of:

If the firm's competitive advantage is country-based,the firm can exploit foreign markets either by exports or by direct investment

In an international context,comparative advantage and competitive advantage are identical concepts.

For high-tech products such as aircraft and smartphones,the international fragmentation of the value chain tends to be driven less by cost considerations and more by the availability of sophisticated technical capabilities.

In Ghemawat's "Aggregation,Adaptation,Arbitrage" framework,the potential for a multinational enterprise to exploit arbitrage benefits are likely to be greater in a capital-intensive industry than in a labor-intensive industry

McDonald's introduction of a greater number of local products on its menus,then transferring these items across national borders points to:

The "centralized hub" strategy that Japanese multinationals pursued during the 1970s and 1980s is likely to be most successful in industries with:

When competition is international,competitive advantage depends not just on a firm's internal resources and capabilities,it also depends upon the availability of resources within each firm's country base.

In most countries of the world,Starbucks owns and operates its retail coffee shops.It's decision to enter India by means of a joint venture with Tata Group reflects the complexity of the Indian market and Starbucks need for local knowledge and local connections.

The revealed comparative advantage of the US,India and Australia in cereals is a reflection of these countries' large natural endowments of land.

The benefits from fragmenting a product's value chain across multiple locations almost always outweigh the costs of coordinating globally dispersed activities.