Question 1

Internationalization occurs through two main mechanisms: trade and government policy.

Accepted Answer

Internationalization occurs through various mechanisms beyond trade and government policy, including foreign direct investment, technology exchange, migration, and cultural exchange.

Question 2

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

Accepted Answer

Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. On the other hand, competitive advantage refers to a company's ability to produce a good or service more efficiently or effectively than its competitors. While these concepts are related, they focus on different levels (country vs. company) and different aspects (cost vs. efficiency/quality). Therefore, they are not identical concepts in an international context.

Question 3

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.

Accepted Answer

Switzerland does not have any significant natural resource endowments that contribute to their success in the clock and watch industry. It is more likely that their emphasis on precision and punctuality has led to a national demand for high-quality timepieces, which has in turn driven the development and growth of their clock and watch industry.

Question 4

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.

Accepted Answer

When competition is international, firms must rely not only on their internal resources and capabilities, but also on the resources available within their country of origin. This is because factors such as government policies, infrastructure, and human capital can all affect a firm's ability to compete globally. Therefore, a firm's competitive advantage is influenced by both its internal factors and the external factors within its home country.

Question 5

Porter's "national diamond" framework suggests that a significant factor explaining the dominance by German firms of the world market for luxury and high-performance automobiles is to be found more in the factors of production available in Germany than in the demand characteristics of German consumers.

Accepted Answer

Porter's "national diamond" framework suggests that the dominance of German firms in the luxury and high-performance automobile market is attributed not only to factors of production but also significantly to the sophisticated home demand conditions in Germany, among other factors such as firm strategy, structure, rivalry, and related and supporting industries.

Question 6

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

Accepted Answer

When an industry becomes internationalized, it generally means that more players are entering the market, resulting in increased competition. As the competition intensifies, companies must then engage in price wars and other tactics to win over customers, leading to lower profitability for all players in the industry. This is a common trend across many industries that have experienced increased globalization and cross-border trade.

Question 7

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

Accepted Answer

Fragmenting a product's value chain across multiple locations can lead to increased complexity, higher coordination costs, and potential risks such as political instability or supply chain disruptions, which may not always outweigh the benefits of lower production costs or access to new markets.

Question 8

Service industries such as commercial banking and hotels tend to be "multidomestic" in their pattern of internationalization.

Accepted Answer

Service industries such as commercial banking and hotels tend to have separate strategies for each country they operate in, adapting to local market conditions and cultural differences. This makes them more "multidomestic" in their internationalization approach compared to industries such as manufacturing, which may be more "global" in their approach.

Question 9

Internationalization offers a remarkable opportunity for businesses to expand and prosper.Only the unimaginative and the pessimistic would regard it as a threat.

Accepted Answer

Internationalization does indeed offer opportunities for expansion and prosperity, but viewing it as a threat can also stem from legitimate concerns such as increased competition, cultural barriers, regulatory challenges, and the need for significant investment in new markets, rather than a lack of imagination or pessimism.

Question 10

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.

Accepted Answer

High-tech products often require specialized technical capabilities which may not necessarily be available in one location, leading to the fragmentation of the value chain across different countries to leverage their strengths and expertise. Cost considerations may not be the primary driver in such cases.

Question 11

Sheltered industries are shielded from imports by government restrictions such as import quotas and high tariffs and .

Accepted Answer

The answer of Sheltered industries are shielded from imports by...

Question 12

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.

Accepted Answer

The answer of In pharmaceuticals (where patent protection tends to...

Question 13

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

Accepted Answer

The answer of If the ﬁrm's competitive advantage is country-based,the...

Question 14

Porter's "national diamond" framework implies that government policies which foster "national champions" within technology-based industries are likely to be successful in stimulating national competitiveness in these sectors.

Accepted Answer

Porter's "national diamond" framework suggests that national competitiveness is driven by four interrelated factors: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. It does not specifically advocate for government policies that create "national champions" as a means to enhance competitiveness.

Question 15

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.

Accepted Answer

The answer of In most countries of the world,Starbucks owns...

Question 16

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

Accepted Answer

Revealed comparative advantage in a specific industry or product is usually based on countries' resources and factors of production. In the case of cereals, the natural endowment of land plays a significant role in determining a country's comparative advantage. Therefore, the statement is true, and the answer is A.

Question 17

International trade is motivated by the quest for market opportunities in other countries,while foreign direct investment is motivated by the desire to exploit resources and capabilities in other countries.

Accepted Answer

International trade and foreign direct investment can both be motivated by a variety of factors, including market opportunities and resource exploitation. While international trade may involve seeking out new markets, it can also be driven by the desire to access cheaper inputs or take advantage of economies of scale. Similarly, foreign direct investment can be motivated by the desire to tap into new markets, as well as to access resources or capabilities that may be lacking in the investor's home country. Therefore, the statement that international trade is motivated solely by market opportunities and foreign direct investment solely by resource exploitation is false.

Question 18

Internationalization often involves mergers and acquisitions,hence,it tends to reduce seller concentration within individual national markets.

Accepted Answer

Internationalization through mergers and acquisitions can actually increase seller concentration within individual national markets by reducing the number of independent competitors, potentially leading to fewer, larger players in the market.

Question 19

Comparative advantage refers to countries' relative efficiencies in producing different products

Accepted Answer

Comparative advantage is a concept in economics that refers to the ability of one country to produce a specific good or service at a lower opportunity cost than another country. It is based on the relative efficiencies of production, as each country focuses on producing the goods or services in which it has the greatest advantage. This results in increased efficiency and productivity, leading to overall economic growth and prosperity.

Question 20

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.
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Accepted Answer

Internationalization allows for more foreign firms to enter a domestic market, which increases competition. It also allows for a greater diversity of competitors within each national market, as companies from different countries and industries may now compete against each other. This ultimately leads to increased competition.

Quiz 11: Global Strategy and the Multinational Corporation