1) Tax law variations around the world affect an MNE’s capital budgeting, financing,
and method of setting transfer prices.
2) By operating internationally, a company may take advantage of business-cycle
differences among countries and thereby reduce its financial risks
3) E-commerce facilitates the ability of consumers to compare prices from different
distributors, which will most likely result in lower prices on products.
4) The more a company engages in collaborative agreements, the more it loses control
over decisions and their implementation.
5) The Financial Accounting Standards Board and International Accounting Standards
Board allow firms to use the current-rate method or the temporal method to translate
foreign currency financial statements into the currency of the parent company.
6) Both the form and content of financial statements are currently the same in most
countries due to the convergence of accounting implemented by the International
Accounting Standards Board.
7) International companies often must customize products to comply with local
standards if they are to do business in a particular country.
8) It is rare for a new company to locate its operations near competitors and suppliers
9) The OECD has set transfer pricing guidelines to enhance the manipulation of prices
and therefore taxes for MNEs and the countries where they operate.
10) A push strategy is most likely preferable to a pull strategy when the price of the
product is high relative to incomes.
11) On average, workers displaced by imports earn higher wages in the new jobs they
accept.
12) Most MNEs generate a majority of their revenues in their home regions.
13) Patrons of McDonald’s can enter the restaurant located in any part of the world and
expect to see employees wearing the same uniforms and menus offering the same
products. McDonald’s most likely uses which system of coordination?
A) standardization
B) consensus
C) plan
D) adaptation
14) Which of the following best describes the special drawing right?
A) an international reserve asset created to supplement members’ existing reserve assets
B) the official currency for international trade established by the World Bank
C) a substitute for the fixed value of gold as determined by currency rates
D) a contribution made by countries to join the IMF
15) When a company identifies a market segment on a global basis, such as a segment
based on income, it will likely ________.
A) encounter a similar percentage of the population in each country within that segment
B) find that a niche market in one country may be a mass market in another
C) find that the market in each country is so dispersed that distribution is difficult
D) be aiming at a mass market in each country
16) Which of the following is the price at which the trader is willing to sell foreign
currency?
A) offer
B) bid
C) spread
D) cross rate
17) Hong Kong is one of the top four largest markets in the world in foreign-exchange
trades and the largest in Asia.
18) Presently, which of the following countries is best characterized as a pure example
of a command economy?
A) Russia
B) North Korea
C) China
D) Vietnam
19) In addition to understanding the laws affecting business in countries where their
companies operate, it is most important for managers to understand the ________
A) methods for appointing local judges
B) ethical rationale behind the laws
C) history of the local legal system
D) degree of law enforcement
20) Chrysler granted South East Motor (a company in China) rights to produce its
Grand Voyager minivan for sale in China in exchange for a fee. This is an example of
a(n) ________.
A) licensing agreement
B) bargaining school arrangement
C) technology appropriation
D) turnkey operation
21) The degree of caution companies display in valuing assets and recognizing income
is known as ________.
A) conservatism
B) transparency
C) measurement
D) disclosure
22) The term “________ culture” describes a country in which the norm is a
money-and-things orientation and a belief that it’s better to “live to work” than to “work
to live.”
A) high masculinity
B) physiological
C) non-fatalistic
D) high-femininity
23) Companies with ________ would most likely oppose global protectionist measures.
A) internationally integrated supply chains
B) domestically focused supply chains
C) multidomestic production facilities
D) product differentiation
24) Which term refers to money denominated in the currency of another nation or group
of nations?
A) foreign exchange
B) foreign subsidy
C) export tariff
D) quota
25) Johnson & Johnson distributes decision-making power among departments and
divisions. This policy provides managers with a sense of ownership and control at the
company. Johnson & Johnson is best described as a ________ organization.
A) vertical
B) centralized
C) horizontal
D) decentralized
26) Countries often use local content regulations to determine the proportion of the
product that must be made in the local market versus made outside of the local market
in order to ________.
A) maximize product safety
B) ensure a cultural fit
C) favor domestic companies
D) relieve production pressures on local companies