RSM Internationalization 3 — Questions and Answers
Question 1: A company that pursues a 'transnational strategy' aims to achieve:
- Full local adaptation with no standardization
- Global efficiency, local responsiveness, and worldwide learning simultaneously (Correct answer)
- Cost leadership through complete global standardization
- Decentralized autonomy for each subsidiary
Correct answer: Global efficiency, local responsiveness, and worldwide learning simultaneously
Bartlett & Ghoshal's transnational strategy seeks to balance global integration (efficiency), local responsiveness, and the transfer of knowledge across units.
Question 2: Political risk in international business is BEST described as:
- The risk that interest rates will change abroad
- Government actions or instability that negatively affect a firm's operations or value (Correct answer)
- The probability of losing a lawsuit in a foreign court
- Exchange rate volatility driven by political events
Correct answer: Government actions or instability that negatively affect a firm's operations or value
Political risk encompasses expropriation, regulatory changes, corruption, civil unrest, and other government-related factors that can harm foreign investments.
Question 3: The 'internationalization process model' (Uppsala) posits that firms incrementally increase commitment in a foreign market through four stages. What drives this gradual process?
- Regulatory requirements in the home country
- Reduction of psychic distance over time through experiential learning (Correct answer)
- Competitive pressure from local firms
- Declining transportation and tariff costs
Correct answer: Reduction of psychic distance over time through experiential learning
The Uppsala model holds that firms accumulate market knowledge experientially, reducing perceived psychic distance and supporting deeper commitment at each stage.
Question 4: Which institutional framework distinguishes between regulative, normative, and cognitive pillars that shape organizational behavior across countries?
- Scott's institutional pillars (Correct answer)
- Hofstede's dimensions
- CAGE framework
- Vernon's product life cycle
Correct answer: Scott's institutional pillars
Richard Scott identified three pillars of institutions—regulative (laws), normative (values/norms), and cognitive (shared beliefs)—widely applied in IB research.
Question 5: In the context of global value chains, 'offshoring' differs from 'outsourcing' in that:
- Offshoring always involves a third-party vendor; outsourcing does not
- Offshoring refers to geographic relocation of activities; outsourcing refers to externalizing activities to another firm (Correct answer)
- Outsourcing requires FDI; offshoring does not
- They are synonyms with no meaningful distinction
Correct answer: Offshoring refers to geographic relocation of activities; outsourcing refers to externalizing activities to another firm
Offshoring = moving activities to another country (could remain in-house); outsourcing = contracting activities to an external party (could be domestic or abroad).
Question 6: Ghemawat's CAGE framework is used to assess distance between countries. What does the 'A' stand for?
- Administrative and political (Correct answer)
- Asset specificity
- Asymmetric information
- Adaptive capacity
Correct answer: Administrative and political
CAGE stands for Cultural, Administrative/political, Geographic, and Economic distance—the four dimensions firms should analyze before entering foreign markets.
Question 7: A firm using an 'ethnocentric' staffing approach in its foreign subsidiaries will primarily:
- Hire exclusively local nationals for all positions
- Staff key positions with parent-country nationals (PCNs) (Correct answer)
- Recruit the best candidates globally regardless of nationality
- Rotate staff from third countries to all subsidiaries
Correct answer: Staff key positions with parent-country nationals (PCNs)
Ethnocentric staffing (Perlmutter's EPG model) fills top subsidiary roles with home-country managers, emphasizing HQ control and culture transfer.
RSM Internationalization 3
A company that pursues a 'transnational strategy' aims to achieve: