Chapter 15

Question 1

Internationalization occurs through

Answer 1

Trade(sale and shipment of g and s from one country to another) and Direct Investment(building or acquiring of productive assets in another country)

Question 2

4 types of industries based on the extent and mode of internationalization

Answer 2

Sheltered industries(served by local firms,sheltered from imports and DI by regulation,trade barriers,localized nature of g and s),Trading industries(those where internat. occurs primarly through imports and exports),Multidomestic industries(those that internat. occurs through DI-because trade is not feasible or cause products are nationally differentiated),Global industries(where trade and DI are important)

Question 3

Theory of comparative advantage

Answer 3

A country has this advantage in those products that make intensive use of those resources available in abundance within that country

Question 4

Comparative advantage

Answer 4

Relative effieciencies of producing different products

Question 5

Porter’s National Diamond

Answer 5

Identifies 4 factors that determine a country’s comp.adv within a particular sector:Factor Conditions(the role of highly specialized resources many of which are home-grown rather than endowed),Related and Supporting industries(for each industry closely related industries are resources of critical resources and cap),Demand Conditions(they provide the primary driver of innovation and quality improvement),Strategy,structure and rivalry(role of intense domestic competition in driving innovation,efficiency and upgrading of comp.adv)

Question 6

Determinants of geographical location

Answer 6

Natural resource availability,firm-speciafic comp.adv(where those resources are situated and how mobile they are),tradability(more difficult to transport+more trade barriers=more local production)

Question 7

Just-in-time scheduling

Answer 7

Requires production activities to be in close proximity to one another

Question 8

Entry by means of

Answer 8

Transaction or DI

Question 9

International venture

Answer 9

Partners from different countries form a new company,which they jointly own

Question 10

Arbitrage

Answer 10

Exploration of differences between countries

Question 11

Predatory pricing

Answer 11

Cutting prices to a level that drives competitors out of business

Question 12

Global strategy

Answer 12

Huge scale economies+homogeneous customer preferences

Question 13

Multidomestic strategy

Answer 13

Pronounced national preferences+not prohibitively expensive customatization

Question 14

Global localization

Answer 14

Standardized product features and firms activities where scale economies are substantial and differentiating where national preferences are strongest and where achieving them is not over-costly