MNE Topic 2

Question 1

three sets of conflicting external pressures/forces

Answer 1

daily challenges, account for strategies

1. forces for cross-border integration & coordination
2. national differentiation and responsiveness
3. worldwide innovation and learning

Question 2

main forces for global integration and coordination

Answer 2

1. exploitation of EOS& scope
2. exploit differentials in costs of factors of production (raw materials/labour)
3. competitive positioning (global chess)
4. rise of liberalised trade environment

1,2, = globalisation -> transformed themselves

Question 3

economies of scale

Answer 3

proportionate increases in amounts of inputs employed in production = lower unit costs -> Grant 2013

• increase production -> make sure domestic can buy -> domestic small therefore go abroad to get demand

Question 4

economies of scope

Answer 4

cost of joint production (or development or distribution) of 2 or more products = less than cost of producing them separate (Bartlett and Beamish 2018)

Question 5

competitive positioning

Answer 5

Japanese in automotive sector
using profit to subsidise loss in other markets

e.g. BA -> profit in long distance -> subsidise loss in short distance = push out competitors

• financial and strategic interdependencies

Question 6

liberalised trade environment

Answer 6

cost of importer = lower
trade agreements

Question 7

waves of globalisation

Answer 7

• pace of globalisation = accelerated and complexity

1. 1830-1900 (phone/rail)
2. 1900-1930 (electricity & steel)
   Great Depression and war 2
3. 1948-1970 (US dominant = least harm from war 2) - reduce trade barriers
   end of boom 1970s
   new economic system 1980s
4. 1980 - (tech trigger, personal computer/internet, service sectors = tourism)

Question 8

international trade environment

Answer 8

today = more restricted vs one at beginning of 21st century
-Brexit = job loss (automation) - political reasons
- purchasing power of emerging -> buy from advanced -> global customers
- globalisation can be blamed for job losses but this is due to tech advances and we are more productive
- number of players is increasing - emerging economies increasing
- war and covid

Question 9

forces for national differentiation and responsiveness - main forces for local responsiveness

Answer 9

1. National
2. Host governments demands (policy)
3. growing pressure for localisation

Question 10

National force for local responsiveness

Answer 10

1. culture
   - consumer behaviour (e.g. differences in tea)
   - doing business (e.g. Sweden libertarian country)
2. infrastructure - local standards (TV transmission/voltage) and distribution channels (supermarket and local bazaar)

Question 11

Hofstede and Globe Studies

Answer 11

relate to the way of doing business
1. power distance
2. uncertainty avoidance
3. individualism
4. masculinity

Question 12

Host Governments demands force for local responsiveness

Answer 12

1. national laws and regulations
2. host country pressures and demands

Question 13

Growing pressure for localisation force for local responsiveness

Answer 13

1. culturally sensitive flexibility and responsiveness
2. appeal to nationalism - e.g. Brexit
3. mass customisation - advance tech and automation and AI -> effective way

Question 14

forces for worldwide innovation and learning

Answer 14

increased need for rapid & coordinated worldwide innovation driven by

1. shortening PLC
2. Increased R&D costs (more complex products as new techs) ->cross patenting share resources with other companies or share license -> strategic alliances - get money back ASAP
3. emergence of global tech standards
4. competitors ability to develop and diffuse innovation globally (trends everywhere

Question 15

How to respond to the different forces

Answer 15

= industry effect = mapping industries according to their degree of globalisation (varies)
- dominating forces/strength of forces (globalisation vs local response)

• degree of globalisation evolves -> 1990s onwards = many transnational, some de-globalised after wave of globalisation

Question 16

Types of industries

Answer 16

1. global = forces for global integration dominate
2. multinational/multidomestic = forces for national responsiveness dominate
3. transnational = forces for both global integration & national responsiveness are strong

• differ in respective strengths of globalisation vs localisation pressures (spectrum -> global -> multinational)

Question 17

transnational industry

Answer 17

MNEs = build the capacity to learn from many env in which they operate

Question 18

types of forces

Answer 18

1. economic = centralise activities across border to benefit and capture EOS/EOscope (integrate/coordiante in centralised)
2. social/political (differentiate activities across nations)
3. tech (new trends/ capabilities in place, diffuse products in faster way)

Question 19

why does company go abroad - 5 reasons

Answer 19

1. MS (expand)
2. taxation
3. demand (comp cant fulfil) = customer base
4. production factors
5. diversify risk