1.There is no universally accepted definition of globalisation. It has been suggested that globalisation is a ‘shorthand for how our lives are becoming increasingly intertwined with those of distant people and places around the world –economically, politically and culturally’. According to George Yip, four factors are driving the globalisation potential of an industry. Briefly outline each of these factors.
1......
2......
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4......
2.Define a multinational corporation......
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3.The following diagram shows the product life cycle for a good produced by a US multinational.
(a)Name each of the stages of the product life cycle in the sections 1 to 4 and put these on the diagram.
(b)To which of the relevant stages of the product life cycle do the following statements apply?
(i) Cost cutting is required as markets stagnate. The MNC engages in outsourcing in very low cost countries. The original home country plant will have reduced capacity so that the home country becomes a net importer of the product.
(1) / (2) / (3) / (4)
(ii)Overseas demand continues to grow. However, prices fall as competition develops. To remain competitive the firm reduces costs by outsourcing to other countries.
(1) / (2) / (3) / (4)
(iii)The firm seeks out domestic consumers as the market develops. As production develops the firm exports to other Western nations that have similar economic prosperity and tastes.
(1) / (2) / (3) / (4)
(iv)The home market becomes saturated. Overseas production takes place in Western nations. The MNC begins exporting and locating in developing nations.
(1)/ (2) / (3) / (4)
(2)
(c) How might a firm avoid the problems associated with stages 3 and 4?
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(d) Does the product life cycle model of multinational business development explain each of the following? Give reasons.
(i)The horizontally integrated multinational?......
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(ii)The vertically integrated multinational?......
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(iii)The conglomerate multinational?......
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4.What three factors make up the ‘eclectic paradigm’ of international production?
(i)......
(ii)......
(iii)......
5.How would you classify each of the following in respect of your answer to Q4 above/
(a)Large investments over a number of years in research and development......
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(b)The existence of low wages in a host economy......
(c)A highly adept and skilled managerial team......
(d)A high level of industrial disputes in a host economy......
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(e) The creation of a global brand......
(f) The high search costs involved in finding the right distribution agent in a host country......
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6.Identify four advantages of MNC investment for a host nation.
(i)......
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(ii)......
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(iii)......
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(iv)......
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7.Identify four disadvantages of MNC investment for a host nation.
(i)......
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(ii)......
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(iii)......
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(iv)......
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