If a U.S.-based MNE translates its German subsidiary’s financial statements from euros
into dollars using the current-rate method, how would it recognize translation gains and
losses?
A) Gains and losses would be taken to the income statement.
B) Gains and losses would be recognized on the balance sheet in owners’ equity.
C) Gains and losses are not recognized since the financial statements are in dollars.
D) There are transaction gains and losses but not translation gains and losses.
When a company wants to be compensated in a foreign subsidiary beyond its
contribution in capital and managerial resources, it often ________.
A) licenses intangible property to its subsidiary
B) negotiates a special agreement with the host government
C) establishes a management contract
D) sets up an equity alliance
Why might companies sometimes narrow the product line that they sell in a foreign
country as compared to the product line they sell at home?
A) Government restrictions typically limit how many products a company can sell
locally.
B) Selling cost per unit increases substantially when a company offers a broad product
line.
C) Not all products have sufficient demand in every market.
D) Firms cannot sell products with product line gaps.
The U.S. catfish industry successfully petitioned the U.S. government to require that
catfish varieties imported from Vietnam be labeled as “tra,” “basa,” or “pangasius.” This
is an example of which of the following?
A) an embargo
B) a tariff
C) a nontariff barrier
D) a direct price influence
Rockwall Enterprises is planning to expand the firm by establishing operations outside
of the United States. In which of the following countries would Rockwall most likely be
able to establish operations most quickly?
A) Japan
B) Brazil
C) Germany
D) Australia
Which of the following statements about GE and its “Green is Green” movement is
true?
A) GE is responding in part to the fact that it is operating in many countries which
require compliance with higher environmental standards than exist in the United States.
B) GE has decided to develop new products that are environmentally friendly rather
than adopt internal policies to reduce greenhouse gas emissions.
C) GE has moved aggressively to reduce greenhouse gas usage internally but has not
been able to develop commercially viable “clean” technologies.
D) GE considered joining the U.S. Climate Action Partnership but decided the group
was too radical in its approach to reducing greenhouse gas emissions.
Ray, a marketer at a global firm, monitors the exchange rate of countries in which the
firm sells its products. Ray is most likely concerned about changes in ________.
A) operating expenses
B) exporting policies
C) product demand
D) quality control
Acquiring and allocating financial resources among the company’s activities and
projects is the responsibility of the ________.
A) accounting function of the firm
B) external auditors
C) CFO
D) financial marketing manager
Which of the following has NOT been a major force increasing globalization in recent
decades?
A) liberalization of cross-border trade
B) increase in and expansion of technology
C) growing pressure from consumers
D) decreasing prices of natural resources
Executives at a U.S. firm are debating whether to start a new operation in Russia or
acquire an existing one. Which of the following factors best supports a decision to start
up a new operation in Russia?
A) The Russian government places restrictions on the outward transfer of foreign
capital.
B) Labor relations at existing Russian firms are poor and difficult to change.
C) Russia’s currency is weak and stock market prices are significantly depressed.
D) Existing companies have goodwill and positive brand recognition in Russia.
Managers who are knowledgeable about ________ are better able to identify the
location, quantity, quality, and availability of the world’s natural resources.
A) political factors
B) geographic factors
C) competitive factors
D) cultural factors
Which of the following best explains why SpinCent decided to export?
A) growth opportunities in Asia
B) labor demands in the U.S.
C) declining tariffs in the EU
D) promising market locations in South America
Contrary to the product life cycle theory, there has been an increased tendency for
companies to ________.
A) sell products only in their home markets throughout the cycle
B) produce and sell products in countries where counterfeiting is low
C) introduce new products simultaneously in domestic and foreign markets
D) sell new products in developing countries before expanding into developed countries
The probability that a business is engaged in exporting tends to ________.
A) decrease with the size of the firm
B) increase with the product life cycle
C) decrease with the product life cycle
D) increase with the size of the firm
Some critics complain that MNEs introduce and promote superfluous products in
developing countries, causing consumers there to buy these products rather than things
they need for their health. People answering this criticism have contended that
________.
A) consumers don’t buy things because of promotion
B) the amount spent on so-called superfluous products is insignificant
C) it is impossible to draw a line between people who can afford and people who can’t
afford these products
D) these products serve to motivate people in developing countries to work harder
Jason works in finance at an MNE. Part of his job is to invest large sums of money in
various markets. His latest transaction was investing $10,000 in British pounds for 120
days, then taking the British pounds and investing them in euros for 90 days, and then
converting it all back to U.S. dollars. Jason is most likely participating in ________.
A) interest arbitrage
B) speculation
C) cryptocurrency
D) options
A company’s location should be flexible enough to ________.
A) implement concentration strategies instead of diversification strategies
B) respond to new opportunities and withdraw from less profitable ones
C) import from anywhere in the world to a single production location
D) export anywhere in the world from a single production location
Craig, a manager at a global firm, is studying the cyclical nature of growth and
employment as a part of the process to forecast exchange rates. Which factor is Craig
most likely monitoring?
A) the institutional setting
B) fundamental analyses
C) cultural analyses
D) circumstances
Organization ________ refers to the formal arrangement of roles, responsibilities, and
relationships within an organization.
A) structure
B) systems
C) culture
D) strategy
The comparative advantage theory holds that a country will gain from trade ________.
A) when it exports products for which it has an acquired advantage and imports
products for which another country has a natural advantage
B) if it exports goods it can produce more efficiently than other countries and imports
goods other countries can produce more efficiently than it can
C) even though it can produce all goods more efficiently than other countries
D) if it exports products using its abundant production factors in exchange for products
for which it has scarce production factors
Which of the following BEST explains Blockbuster’s failed expansion into Germany?
A) laws limiting hours of operation
B) lack of public interest in films
C) inadequate tax incentives
D) communication problems
In a country with a currency that is not freely floating, the timing of an exchange rate
change is often a ________ decision.
A) cultural
B) consensus
C) political
D) market
An element of total quality management (TQM) that focuses on continuous
improvement by identifying problems and enlisting employees to help eliminate them is
known as ________.
A) kaizen
B) Six Sigma
C) kanban
D) acceptable quality level (AQL)
Ethical dilemmas tend to be ________ for MNE managers than for domestic managers.
A) more complicated
B) less controversial
C) easier to decide
D) less common
A system of ________ law sets the framework for the system of government and
defines the authority and procedure of political bodies to establish laws and regulations.
A) criminal
B) constitutional
C) civil
D) commercial
The ________ is the common currency of the European Union.
A) franc
B) pound
C) euro
D) mark
Advocates of the comparable access argument for trade protection primarily assert that
domestic industries ________.
A) will deteriorate in countries that have lower import restrictions than their trading
partners
B) should be required to implement export-led development policies on foreign
competitors
C) are entitled to the same access to foreign markets as foreign industries have to their
markets
D) are forced to lower prices for domestic consumers because of foreign import
restrictions
Giga-Mart has an IT system that links the firm’s suppliers, manufacturers, customers,
and intermediaries. Giga-Mart most likely has a(n) ________,
A) TQM (total quality management)
B) JIT (just-in-time)
C) EDI (electronic data interchange)
D) ERP (enterprise resource planning)
According to the PLC theory, at an early stage of a product’s life cycle the product is
likely to be made in a more ________ method than in its later stages.
A) capital-intensive
B) labor-intensive
C) land-intensive
D) low-cost
The concept of organization includes how a company does all of the following
EXCEPT ________.
A) specifies the framework for work
B) develops systems that coordinate and control tasks
C) cultivates a common workplace culture among employees
D) plans leadership and training programs to develop the managerial staff
Why are MNEs criticized for exporting to developing countries the same products they
sell in developed countries?
A) The prices of the products are too low in developing countries.
B) Many of the products are deemed to be unnecessary for low income consumers.
C) The sales enhance local company failures in developing countries.
D) Developing countries need local production rather than imports.
________ is an important cash-management strategy that reduces transaction costs by
coordinating cash inflows and outflows among subsidiaries.
A) Net present value
B) Capital budgeting
C) Forecasting
D) Netting