ULUSLARARASI İŞLETME - Deneme Sınavı - 7

The Eclectic Paradigm proposes a general
framework for determining the extent and pattern
of internationalization of the firm. The Paradigm
embraces various explanations of the activities
of firms engaging in cross-border value-adding
activities.

If a firm decides to enter foreign markets,
a new question emerges: How does the firm
internationalize? The internationalization process
(IP) model (Johanson & Vahlne, 1977; Vahlne
& Johanson, 2017) and linkage-leverage-learning
(LLL) framework (Mathews, 2006; 2017) are the
dominant views on this subject

In the IP model, there are two types of variables:
state and change. The change variables are the crucial
ones since these processes change the characteristics
of the focal firm and its environment and then
trigger further changes. They involve knowledge
development processes, including learning,
creating and trust-building; and commitment
processes, including reconfiguring resources and
coordinating. The state variables include both
operational (resources, skills, relationships, and
organizational culture) and dynamic (integrating,
building and reconfiguring competencies)
capabilities, commitments (the distribution of
resources over the firm’s functions, its product lines,
the countries where it is active, and the networks in
which it has invested), and the performance of the
firm.

The LLL framework has three pillars: linkage,
leverage, and learning

The LLL framework has three pillars: linkage,
leverage, and learning. Linkage refers to connecting
and making business with resource-rich companies
or companies already active in the target market.
The linkage can be affected through strategic
alliances

First-mover advantages include catching
learning effects, achieving economies of scale,
and forging alliances with the most attractive
local partner, and setting the standards and
rules. Late-mover advantages comprise free-riding
on first movers’ pioneering investments,
avoiding considerable technological and
market related uncertainties, and evading
being locked into a set of fixed assets or
cannibalizing the existing product lines in
favor of the new ones.

Exporting refers to selling products which
have been produced in one country
to customers in the other country or
countries.

There are some disadvantages of exporting (Hill
& Hult, 2019: 439):
1. Especially for bulk products, high transport
costs can make exporting expensive.
2. Tariff barriers can make exporting costly.
Similarly, the threat of tariff barriers by the
host-country government can make it very
risky.
3. In indirect exporting, intermediaries often
carry the products of competing firms and
so have divided loyalties. In such cases, the
intermediary may not do as good a job as
the firm would if it managed its marketing
itself.

In partner selection, the following partner traits
have a positive influence on alliance performance:
partner complementarity, partner commitment,
and partner fit. Partner complementarity is the
extent to which the partner has capabilities that
the company lacks and that it values. Partner
commitment refers to making necessary sacrifices
for the success of the alliance and not exploiting
the alliance opportunistically for the partner’s ends.
Partner fit is the congruence between the partners’
visions

There are three main disadvantages of contract
manufacturing (Hill et al., 2015: 311-312):
1. If the company becomes too dependent
upon the specialist provider of the
contracting activity, the specialist can
use this fact to raise prices beyond some
previously agreed-upon rate.
2. As firms employ contract manufacturers
for production, they may nurture potential
rivals, and they may help build an industrywide resource that lowers the barriers to
entry in that industry.
3. A company that is not careful can lose
important competitive information when
it adopts contract manufacturing. The firm
that gives up developing its manufacturing
knowledge could unintentionally give up
opportunities to improve its capabilities in
product design.

Today globalization refers to the shift toward a more integrated and interdependent world economy (Hill and Hult, 2019: 6). From a broader perspective, globalization can also be defined as the process of social, political, economic, cultural, and technological integration among countries around the world (Luthans and Doh, 2018: 5). It is characterized by denationalization, and it is different from internationalization (Wild and Wild, 2016: 35). However, International Business refers to the exchange of goods and services across the border between two or more nations. Thus, E is the correct answer.

A free trade agreement (FTA)is a pact between a group of countries that have reduced trade barriers/tariffs to imports and exports among them to increase the trade of goods and services. Thus, the correct answer is C.

Some of the advantages of globalization are as follows:

They argue that globalization has the potential to make this world a better place to live in and to solve some of the long- lasting structural problems such as unemployment and poverty.

As being an important driver of globalization, free trade is supposed to reduce barriers between nations such as tariffs, value- added taxes, and subsidies.

Competitionbetweencountriesis supposed to drive prices down.

It allows more influx of information between any two countries that do not have anything in common. It enables cultural intermingling, and countries involved in this learn more about other cultures.

Yet, the riches' becoming richer while the non-riches' becoming poorer is a downside of globalization. Therefore, A is the correct answer.

Offshoring is the process by which companies undertake some activities at offshore locations instead of in their countries of origin.

Outsourcing is the subcontracting or contracting out of activities to endogenous organizations that had previously been performed by the firm.

Reshoring is the process of bringing production back to the developed nations.

Internationalization is “the process by which a firm gradually changes in response to the imperatives of international competition, domestic market saturation, desire for expansion, new markets, and diversification.

Totalitarianism is a political system in which only one representative party is/or forcefully gets authorized to control over every facet of political and social life.

Thus, B is the correct answer.

According to he CAGE framework at the industry level, geography plays a more important role when:

Products have a low value-weight or value-to-bulk ratio.

Products are fragile or perishable.

Local supervision and operational requirements are high.

Hence, D is the right answer.

Managing an international business is different from conducting business activities domestically at least for four reasons. First of all, international business encompasses different countries. Secondly, managers of international businesses face more comprehensive and sophisticated challenges than their domestic counterparts. Thirdly, government intervention is inevitable in international transactions. Lastly, international business requires companies to work with different currencies (Hill and Hult, 2019: 32). Thus, B is the correct answer.

A Multinational Enterprise (MNE) is any business that has productive activities in two or more countries.

An MNC (Multinational Corporation) is a firm that has operations and international sales in more than one country and a mix of nationalities among managers and owners.

Global corporations view the world as one marketplace and produce standardized goods and services to serve this market.

Transnational corporations integrate a geographically dispersed set of specialized activities into a single production process.

A Born-global firm is a company that adopts a global perspective and engages in international business from or near its inception.

Hence, D is the correct answer.

Democracy is a political system in which the government is controlled by the citizens either directly or through elections.

Totalitarianism is a political system in which there is only one representative party which exhibits control over every facet of political and social life.

Collectivism as an ideology views the whole society as more important than its parts.

Individualism is the political philosophy that people should be free to pursue economic and political endeavors without constraint.

Therefore, the right answer is C.

The main aim of the WTO is to promote secure and safe trade across the globe and protect the best interest of producers and consumers. Its primary responsibility is to police the world trade system and to make nation-states adhere to the rules laid down in treaties signed by member states. As of 2017, it has 164 members conducting 98% of the world trade, thereby providing enormous influential power for developing a more open global business system (Hill and Hult, 2019: 10). Thus, E is the correct answer.

The four dimensions identified in the study were power distance, uncertainty avoidance, individualism, and masculinity. Hofstede further added to the framework the time orientation dimension in 1988 and the indulgence versus restraint dimension in 2010. Hence, A is the correct answer.