Chapter 1
Globalization and the Multinational Enterprise
Questions
1-1. Globalization and the MNE. The term globalization has become very widely used in recent years. How would you define it? Narayana Murthy’s quote is a good place to start any discussion of globalization: “I define globalization as producing where it is most cost-effective, selling where it is most profitable, and sourcing capital where it is cheapest, without worrying about national boundaries.” Narayana Murthy, President and CEO, Infosys 1-2. Globalization and Value Creation. What does an MNE need in order for it to create value through the globalization process? Global business, like any business, is the social science of managing people to organize, maintain, and
• The classical model of comparative advantage did not really address certain other issues such as the effect of uncertainty and information costs, the role of differentiated products in imperfectly competitive markets, and economies of scale. Nevertheless, although the world is a long way from the classical trade model, the general principle of comparative advantage is still valid. The closer the world gets to true international specialization, the more world production and consumption can be increased, provided the problem of equitable distribution of the benefits can be solved to the satisfaction of consumers, producers, and political leaders. Complete specialization, however, remains an unrealistic limiting case, just as perfect competition is a limiting case in microeconomic theory.

Chapter 1

Globalization and the Multinational Enterprise

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1-6.

Trident’s Globalization. After reading this chapter’s description of Trident’s globalization process, how would you explain the distinctions between international, multinational, and global companies? The difference in definitions for these three terms is subjective, with different writers using different terms at different times. No single definition can be considered definitive, although as a general matter the following probably reflect general usage. International simply means