According to the eclectic paradigm, which of the following is an example of an internalisation advantage?Question 10Select one:a.Tax ratesb.Efficiency-related standardisation of production across global operationsc.Naturally-located raw materialsd.Entrepreneurial skills
Question
According to the eclectic paradigm, which of the following is an example of an internalisation advantage?Question 10Select one:a.Tax ratesb.Efficiency-related standardisation of production across global operationsc.Naturally-located raw materialsd.Entrepreneurial skills
Solution
The eclectic paradigm, also known as the OLI model or OLI framework (Ownership, Location, Internalization), is a theory in economics that provides a framework for determining the extent and pattern of the value-chain operations that companies can feasibly conduct abroad.
In this context, internalization advantages refer to the benefits that a firm gains from conducting a business operation within the company rather than through an independent foreign entity. This often involves managing and controlling processes, knowledge, and technologies.
Given the options:
a. Tax rates b. Efficiency-related standardisation of production across global operations c. Naturally-located raw materials d. Entrepreneurial skills
The answer would be b. Efficiency-related standardisation of production across global operations. This is because standardizing production across global operations can lead to cost savings, improved quality control, and a more consistent product, which are all benefits of internalization.
Similar Questions
According to the eclectic paradigm, which of the following is an example of an ownership advantage?Question 8Select one:a.Efficiency-related standardisation of production across the global operationsb.Naturally-located raw materialsc.Entrepreneurial skillsd.Tax rates
What are the advantages of internalisation theory? a.Reduced transaction costs, increased control, and improved coordination b.Reduced production costs, increased efficiency, and improved quality cc.Increased competition, lower prices, and improved customer satisfactiond.Increased innovation, lower taxes, and improved employee morale
The "Eclectic Paradigm" by John Dunning identifies three categories of gains from international production, which of the following is NOT one of these categories? The "Eclectic Paradigm" by John Dunning identifies three categories of gains from international production, which of the following is NOT one of these categories? Ownership-specific assets Interest rate advantage Internalisation advantages Location advantages
Internalization in the context of internationalization refers to conducting firm activities in a foreign market by organizing it within the boundaries of the firm instead of relying on the market to supply or provide for that particular activity. Internalization has the most direct impact on entry mode choice. If a firm decides to internalize its foreign operations it will have to choose a high commitment/control entry mode typically a wholly-owned subsidiary or a majority-owned joint venture. When is low commitment/control mode considered superior? Group of answer choiceswhen firm is highly resourceful in managing the different activitieswhen firm's resources are superior to resources of otherswhen firm can benefit from scale economies of the marketplacewhen bureaucratic disadvantages that accompany integration are very low
For each of the following, explain how it can be a source of comparative advantage and provide an example. a. Abundant inputsb. Specialised skillsc. Mass production
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