1) Ownership advantages refer to a firm’s specific assets, international experience, and
the ability to develop either low-cost or highly differentiated products within the
context of its particular value chain.
2) Headquarters management often feels that people within an established operation are
the best judge of the operation’s investment needs.
3) It is generally agreed that because of technical advancements, managers will not
need face-to-face communication in the future.
4) The “Dependencia” theory holds that the terms for a foreign investor’s operations
depend on how much the investor and the host country need each other’s assets.
5) Licenses are often given to companies owned in whole or in part by the licensor.
6) According to 2010 surveys, the most frequently traded currency pair is the U.S.
dollar and Japanese yen.
7) Using a transnational strategy pushes a company to centralize some functions in
optimal locations, base some functions in national subsidiaries to ensure local
responsiveness, and develop wide-ranging communications among various units.
8) Although the European Union is a common market, member countries have different
economic growth rates.
9) Fundamental forecasting uses trends in economic variables to predict future rates.
10) Companies have tended to wait too long to divest poorly performing foreign
facilities, trying instead to improve performance through expensive means.
11) How would you classify the accounting values of companies from the United States
and the United Kingdom in terms of their measurement and disclosure of financial
information?
A) secret and transparent
B) transparent and optimistic
C) secret and conservative
D) conservative and optimistic
12) Three types of control systems are used in MNEs. These are ________.
A) market control, bureaucratic control, and clan control
B) standardization control, adjustment control, and clan control
C) market control, adjustment control, and clan control
D) planning control, market control, and clan control
13) A bond issue floated by a U.S. company in dollars in London, Luxembourg, and
Switzerland by a syndication of bonds is an example of a ________.
A) global bond
B) domestic bond
C) Eurobond
D) foreign bond
14) A government that enforces its own laws on foreign subsidiaries of its domestic
companies practices ________.
A) civil law
B) relativism
C) externality
D) extraterritoriality
15) Abel Enterprises has implemented a system based on coordination by mutual
adjustment. Which of the following would most likely be used by Abel Enterprises?
A) strict scheduling
B) social networking
C) synchronized training
D) centralized decision making
16) The OECD Convention against bribery is an example of a(n) ________.
A) bilateral agreement developed for the EU
B) agreement that targets the demand side of bribery
C) agreement that targets the supply side of bribery
D) UN Convention dominated by developing countries
17) Local content regulations are primarily intended to ________.
A) address cultural differences between local employees and expatriates
B) encourage MNEs to increase production activities in a country
C) address contract negotiation difficulties
D) assess local tax rates on MNEs
18) A(n) ________ manager champions the ways of foreign markets as comparable, if
not more enlightened, than the practices of his or her parent company and home nation.
A) ethnocentric
B) geocentric
C) monocentric
D) polycentric
19) The role of most commodity agreements now is to ________.
A) discuss issues and disseminate information about commodities
B) keep consumer countries from controlling commodity prices
C) allow producer countries to control inflation by keeping commodity prices low
D) stabilize prices through regional alliances between producer and consumer countries
20) Which of the following best explains why U.S. firms typically place earlier and
greater emphasis on expansion into Canada and the U.K.?
A) most significant sales opportunities
B) similarities in culture and legal systems
C) availability of necessary natural resources
D) government incentives for allied nations
21) 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
22) Billions ‘of investment dollars are needed to develop many new products. This trend
toward higher development costs is likely to have which of the following effects on
future modes of operations?
A) Collaborative arrangements are likely to decrease because a company making a
breakthrough will be leery of partners’ appropriation of knowledge
B) Collaborative arrangements are likely to increase because of the huge investments
needed for development
C) Exporting will become more important relative to other operating modes because of
the large scale production facilities necessary for economic efficiency
D) Cross-licensing will gain in importance because companies will be forced to
specialize more in different technologies
23) Transfer prices are ________.
A) always based on production costs
B) the prices on goods transferred from one country to another
C) regulated by the United Nations so as to avoid manipulation
D) often used to minimize taxation
24) Firms that operate in countries that have adopted the Kyoto Protocol are required to
either reduce emissions or ________.
A) purchase carbon credits from other firms
B) file petitions to appeal the requirement
C) cease manufacturing operations
D) pay fines to the U.N
25) An NGO is ________.
A) an agency of the United Nations
B) a private institution independent of a government
C) any organization working on environmental issues
D) an organization that is concerned only with workers’ rights
26) Gavin Pharmaceuticals is a U.S.-based MNE. Which of the following is probably
Gavin’s most important metric when evaluating the firm’s performance?
A) foreign sales
B) market share
C) return on investment
D) sales revenue budget
27) Unlike the infant-industry argument, the industrialization argument for trade
protection ________.
A) requires independence from other countries
B) stresses labor-intensive production methods despite high costs
C) emphasizes use of locally available raw materials for manufacturing inputs
D) presumes that economic growth will occur even if domestic manufactured prices are
not globally competitive
28) Which force in Toyota’s immediate environment would most likely have the
greatest impact on its strategy?
A) interest rate trends
B) technology developments
C) shifts in U.S. political attitudes
D) actions taken by Honda and Mercedes Benz
29) The process of combining financial statements of different subsidiaries into one
statement is known as ________.
A) conversion
B) translation
C) consolidation
D) recognition
30) One way that developed countries specialize in order to gain acquired advantages is
by ________.
A) allocating research efforts more heavily in specific sectors
B) emphasizing production in natural resource endowments
C) restricting imports to those in the service sector
D) subsidizing the transport of exports