RSM Internationalization 4

Question 1

Vernon's Product Life Cycle theory of internationalization predicts that production of a mature product will eventually shift to:

Accepted Answer

Developing countries with lower factor costs

Answer

As products mature and competition intensifies on price, Vernon argued production migrates to lower-cost developing countries where labor and other inputs are cheaper.

Question 2

Which type of FDI is motivated by securing raw materials or natural resources rather than serving a local market?

Accepted Answer

Resource-seeking FDI

Answer

Resource-seeking FDI (Dunning's typology) is driven by access to natural resources, agricultural commodities, or low-cost labor in the host country.

Question 3

An MNE that structures its value chain so that each subsidiary specializes in one activity for the global network is pursuing:

Accepted Answer

Integrated network / global factory model

Answer

The integrated network model (Bartlett & Ghoshal) assigns each subsidiary a specialized role, creating interdependencies that exploit global scale and location advantages.

Question 4

Which concept describes the advantage that MNEs derive from operating simultaneously in multiple national markets, allowing arbitrage and risk diversification?

Accepted Answer

Multinationality premium / diversification advantage

Answer

Operating across multiple countries lets MNEs exploit differences in factor costs, taxes, and regulations, and spread risks—collectively called the multinationality premium.

Question 5

In a franchising arrangement for international expansion, the franchisor's PRIMARY risk is:

Accepted Answer

Loss of control over brand quality and standards by franchisees

Answer

Because franchisees are independent operators, inconsistent service or product quality can damage the franchisor's brand globally—the central control challenge.

(RSM) Rotterdam School of Management Practice Test

(RSM) Rotterdam School of Management Practice Test

RSM Internationalization 4