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Answer to #1
Special interest groups engage in political activity to advance specific causes, ranging from labor rights to environmental protection. They often influence national political processes and produce outcomes with far-reaching consequences for business. Many groups target particular industries and affect individual firms accordingly. Special interest groups operate not only in host countries but also in the home country.
For example, In China, activists are pressuring the government to reduce pollution. Rapid industrialization-especially in the form of factory output, burning coal, and motor vehicles-has contaminated China's air, water, and soil. In the United States, Greenpeace and other environmentalist groups opposed construction of the Keystone pipeline, fearing it would produce oil spills, polluting ground water and killing wildlife. Environmentalist groups were instrumental in halting construction of the pipeline in 2015.
Answer to #2
FALSE
Answer to #3
In 1947, twenty-three nations signed the General Agreements on Tariffs and Trade (GATT), the first global effort to systematically reduce trade barriers worldwide. The organization proved extremely effective and resulted in the greatest global decline in trade barriers in history. The GATT created: 1. a process to reduce tariffs through continuous negotiations among member nations; 2. an agency to serve as a watchdog over world trade; 3. a forum for resolving trade disputes.
The GATT introduced the concept of most favored nation (renamed normal trade relations in 1998), according to which each signatory nation agreed to extend the tariff reductions covered in a trade agreement with a trading partner to all other countries. Thus, a concession to one country became a concession to all.
Answer to #4
FALSE
Answer to #5
Strategic Motivations
a. One reason why firms might expand internationally is to seek opportunities for growth through market diversification. Firms expand to tap into the market potential that exists outside the home country. One example is the expansion of automatic teller machines (ATMs) throughout the world.
b. Firms expand to earn higher margins and profits. Foreign markets are often underserved or not served at all. Less intense competition, combined with strong market demand, implies that companies can command higher margins for their offerings. For example, compared to their respective home markets, bathroom fixtures manufacturers American Standard and Toto (of Japan) have found a more favorable competitive environment in rapidly industrializing countries such as Indonesia, Mexico, and Vietnam.
c. Firms internationalize to gain new ideas about products, services, and business methods. The experience of doing business abroad helps firms acquire new knowledge for improving organizational effectiveness and efficiency. For example, just-in-time inventory techniques were refined by Toyota and then adopted by other manufacturers all over the world.
d. Firms might internationalize to be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in the sourcing of products. Companies often establish international operations in countries where needed raw materials are located, or where raw materials and labor can be more flexibly accessed. One example is the aluminum producer Alcoa, which established operations in Brazil, Guinea, Jamaica, and elsewhere to extract aluminum's base mineral bauxite from local mines.
e. Firms expand to gain access to lower-cost or better-value factors of production. Internationalization enables the firm to access capital, technology, managerial talent, labor, and land at lower costs, higher-quality, or better overall value at locations worldwide. For example, some Taiwanese computer manufacturers have established subsidiaries in the United States to access low-cost capital.
f. Firms internationalize to develop economies of scale in sourcing, production, marketing, and R&D. Economies of scale refers to the reduction of the per-unit cost of manufacturing and marketing due to operating at high volume. For example, the per-unit cost of manufacturing 100,000 cameras is much cheaper than the per-unit cost of making just 100 cameras. By expanding internationally, the firm greatly increases the size of its customer base, thereby increasing the volume of products that it manufactures.
g. Firms might expand to invest in a potentially rewarding relationship with a foreign partner. Firms often have long-term strategic reasons for venturing abroad. Joint ventures or project-based alliances with key foreign players can lead to the development of new products, early positioning in future key markets, or other long-term profit-making opportunities. For example, Black and Decker entered a joint venture with Bajaj, an Indian retailer, to position itself for expected long-term sales in the huge Indian market.
Reactive Motivations
Firms expand to better serve key customers that have relocated abroad. In a global economy, many firms internationalize to better serve clients that have moved into foreign markets. For example, when Nissan opened its first factory in the United Kingdom, many Japanese auto-parts suppliers followed, establishing their own operations there.
Strategic or Reactive Motivations
Firms might also internationalize to confront international competitors more effectively or thwart the growth of competition in the home market. International competition is substantial and increasing, with multinational competitors invading markets worldwide. The firm can enhance its competitive positioning by confronting competitors in international markets or preemptively entering a competitor's home markets to destabilize and curb its growth. If the firm acts to confront an existing competitor, it would be responding reactively. If the firm acts to preempt a competitor, it would be responding proactively.
One example of a proactive response is Caterpillar's preemptive entry into Japan just as its main rival in the earthmoving equipment industry, Komatsu, was getting started in the early 1970s. Caterpillar's preemptive move hindered Komatsu's international expansion for at least a decade. Had it not moved proactively to stifle Komatsu's growth in Japan, Komatsu's home market, Caterpillar would certainly have to face a more potent rival sooner.
Answer to #6
TRUE
Answer to #7
TRUE
Answer to #8
TRUE
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