Chapter 1
Multinational Financial Management: An Overview
Lecture Outline
Managing the MNC
How Business Disciplines Are Used to Manage the MNC
Agency Problems
Management Structure of an MNC
Why Firms Pursue International Business
Theory of Comparative Advantage
Methods to Conduct International Business
International Trade
Licensing
Franchising
Valuation Model for an MNC
Domestic Valuation Model
Multinational Valuation Model
Organization of the Text
Multinational Financial Management: An Overview ❖ 2
Chapter Theme
This chapter introduces the multinational corporation as having similar goals to the purely domestic
corporation, but a wider variety of opportunities. With additional opportunities come potential increased
returns and other forms of risk to consider. The potential benefits and risks are introduced.
Topics to Stimulate Class Discussion
1. What is the appropriate definition of an MNC?
2. Why does an MNC expand internationally?
POINT/COUNTER-POINT:
Should an MNC Reduce Its Ethical Standards to Compete Internationally?
POINT: Yes. When a U.S.-based MNC competes in some countries, it may encounter some business
norms there that are not allowed in the U.S. For example, when competing for a government contract,
firms might provide payoffs to the government officials who will make the decision. Yet, in the United
States, a firm will sometimes take a client on an expensive golf outing or provide skybox tickets to
events. This is no different than a payoff. If the payoffs are bigger in some foreign countries, the MNC
can compete only by matching the payoffs provided by its competitors.
COUNTER-POINT: No. A U.S.-based MNC should maintain a standard code of ethics that applies to
any country, even if it is at a disadvantage in a foreign country that allows activities that might be viewed
as unethical. In this way, the MNC establishes more credibility worldwide.
WHO IS CORRECT? Use the Internet to learn more about this issue. Which argument do you support?
Offer your own opinion on this issue.
Multinational Financial Management: An Overview ❖ 3
Answers to End of Chapter Questions
1. Agency Problems of MNCs.
a. Explain the agency problem of MNCs.
ANSWER: The agency problem reflects a conflict of interests between decision-making managers
ANSWER: The agency costs are normally larger for MNCs than purely domestic firms for the
2. Comparative Advantage.
a. Explain how the theory of comparative advantage relates to the need for international business.
ANSWER: The theory of comparative advantage implies that countries should specialize in
b. Explain how the product cycle theory relates to the growth of an MNC.
3. Imperfect Markets.
a. Explain how the existence of imperfect markets has led to the establishment of subsidiaries in
foreign markets.
ANSWER: Because of imperfect markets, resources cannot be easily and freely retrieved by the
b. If perfect markets existed, would wages, prices, and interest rates among countries be more
similar or less similar than under conditions of imperfect markets? Why?
ANSWER: If perfect markets existed, resources would be more mobile and could therefore be
4. International Opportunities.
Multinational Financial Management: An Overview ❖ 4
a. Do you think that either the acquisition of a foreign firm or licensing will result in greater growth
for an MNC? Which alternative is likely to have more risk?
b. Describe a scenario in which the size of a corporation is not affected by access to international
opportunities.
international expansion.
ANSWER: Coca Cola and PepsiCo still have new international opportunities because countries are at
5. International Opportunities Due to the Internet.
a. What factors cause some firms to become more internationalized than others?
b. Why might the Internet have resulted in more international business.
ANSWER: The Internet allows for easy and low-cost communication between countries, so that firms
could now develop contacts with potential customers overseas by having a website. Many firms use
6. Impact of Exchange Rate Movements. Plak Co. of Chicago has several European subsidiaries that
remit earnings to it each year. Explain how appreciation of the euro (the currency used in many
European countries) would affect Plak’s valuation.
7. Benefits and Risks of International Business. As an overall review of this chapter, identify possible
reasons for growth in international business. Then, list the various disadvantages that may discourage
international business.
Multinational Financial Management: An Overview ❖ 5
8. Valuation of an MNC. Hudson Co., a U.S. firm, has a subsidiary in Mexico, where political risk has
recently increased. Hudson’s best guess of its future peso cash flows to be received has not changed.
However, its valuation has declined as a result of the increase in political risk. Explain.
9. Centralization and Agency Costs. Would the agency problem be more pronounced for Berkley
Corp., whose parent company makes most major decisions for its foreign subsidiaries, or Oakland
Corp., which uses a decentralized approach?
ANSWER: The agency problem would be more pronounced for Oakland because of a higher
probability that subsidiary decisions would conflict with the parent. Assuming that the parent
10. Global Competition. Explain why more standardized product specifications across countries can
increase global competition.
11. Exposure to Exchange Rates. McCanna Corp., a U.S. firm, has a French subsidiary that produces
wine. All of the European countries where it sells its wine use the euro as their currency, which is the
same as the currency used in France. Is McCanna Corp. exposed to exchange rate risk?
12. Macro versus Micro Topics. Review this book’s table of contents and indicate whether each of the
chapters from Chapter 2 through Chapter 21 has a macro or micro perspective.
13. Methods Used to Conduct International Business. Duve, Inc., desires to penetrate a foreign market
either by crafting a licensing agreement with a foreign firm or by acquiring a foreign firm. Explain
the differences in potential risk and return between licensing with a foreign firm and acquiring a
foreign firm.
Multinational Financial Management: An Overview ❖ 6
ANSWER: A licensing agreement has limited potential for return, because the foreign firm will
receive much of the benefits as a result of the licensing agreement. Yet, the MNC has limited risk,
14. International Business Methods. Snyder Golf Co., a U.S. firm that sells high-quality golf clubs in
the U.S., wants to expand internationally by selling the same golf clubs in Brazil.
a. Describe the tradeoffs that are involved for each method (such as exporting, direct foreign
investment, and so on) that Snyder could use to achieve its goal.
ANSWER: Snyder can export the clubs, but the transportation expenses may be high. If could
b. Which method of international method would you recommend for this firm? Justify your
recommendation.
ANSWER: If the amount of golf clubs to be sold in Brazil is small, it may decide to export. However,
15. Impact of Political Risk. Explain why political risk may discourage international business.
16. Impact of 9/11. Following the terrorist attack on the U.S., the valuations of many MNCs declined by
more than 10 percent. Explain why the expected cash flows of MNCs were reduced, even if they were
not directly hit by the attacks.
ANSWER: An MNC’s cash flows could be reduced in the following ways. First, a decline in travel
would affect any MNCs that have business in travel-related industries. The airline, hotel, and tourist-
Advanced Questions
17. International Joint Venture. Anheuser-Busch, (which is now part of AB InBev due to a merger),
the producer of Budweiser and other beers, has engaged in a joint venture with Kirin Brewery, the
largest brewery in Japan. The joint venture enables Anheuser-Busch to have its beer distributed
Multinational Financial Management: An Overview ❖ 7
through Kirin’s distribution channels in Japan. In addition, it could utilize Kirin’s facilities to
produce beer that would be sold locally. In return, Anheuser-Busch provided information about the
American beer market to Kirin.
a. Explain how the joint venture enabled Anheuser-Busch to achieve its objective of maximizing
shareholder wealth.
b. Explain how the joint venture limited the risk of the international business.
c. Many international joint ventures are intended to circumvent barriers that might otherwise
prevent foreign competition. What barrier in Japan did Anheuser-Busch circumvent as a result of
the joint venture? What barrier in the United States did Kirin circumvent as a result of the joint
venture?
d. Explain how Anheuser-Busch could have lost some of its market share in countries outside Japan
as a result of this particular joint venture.
18. Impact of Eastern European Growth. The managers of Loyola Corp. recently had a meeting to
discuss new opportunities in Europe as a result of the recent integration among Eastern European
countries. They decided not to penetrate new markets because of their present focus on expanding
market share in the United States. Loyola’s financial managers have developed forecasts for earnings
based on the 12 percent market share (defined here as its percentage of total European sales) that
Loyola currently has in Eastern Europe. Is 12 percent an appropriate estimate for next year’s Eastern
European market share? If not, does it likely overestimate or underestimate next year’s actual Eastern
European market share next year?
19. Valuation of an MNC. Birm Co., based in Alabama, is considering several international
opportunities in Europe that could affect the firm’s value. The valuation depends on four factors: (1)
expected cash flows in dollars, (2) expected cash flows in euros that are ultimately converted into
dollars, (3) the rate at which it can convert euros to dollars, and (4) Birm’s weighted average cost of
capital. For each of the following opportunities, identify the factors that will be affected.
Multinational Financial Management: An Overview ❖ 8
a. Birm plans a licensing deal in which it will sell technology to a firm in Germany for $3,000,000;
the payment is invoiced in dollars, and this project has the same risk level as its existing
businesses.
b. Birm plans to acquire a large firm in Portugal that is riskier than its existing businesses.
c. Birm plans to discontinue its relationship with a U.S. supplier so that can import a small amount
of supplies (denominated in euros) at a lower cost from a Belgian supplier.
d. Birm plans to export a small amount of materials to Ireland that are denominated in euros.
ANSWER:
Opportunity
Dollar CF
Euro CF
Exchange rate at
which Birm Co.
converts euros to
dollars
Birm’s weighted
average cost of
capital
a. joint venture
X
b. acquisition
X
X
c. imported supplies
X
d. exports to Ireland
X
20. Assessing Motives for International Business. Fort Worth Inc. specializes in manufacturing some
basic parts for sports utility vehicles that are produced and sold in the U.S. Its main advantage in the
U.S. is that its production is efficient, and less costly than that of some other unionized
manufacturers. It has a substantial market share in the U.S. Its manufacturing process is labor-
intensive. The company pays relatively low wages compared to its U.S. competitors, but it has
guaranteed the local workers that their positions will not be eliminated for the next 30 years. It hired
a consultant to determine whether it should set up a subsidiary in Mexico, where the parts would be
produced. The consultant suggested that Forth Worth expand for the following reasons. Offer your
opinion on whether the consultant’s reasons are logical:
a. Theory of Competitive Advantage: Not many SUVs are sold in Mexico; hence, Fort Worth Inc.
would not face much competition there.
b. Imperfect Markets Theory: Fort Worth can not easily transfer workers to Mexico, but it can
establish a subsidiary there that it can use to penetrate a new market.
c. Product Cycle Theory: Fort Worth Inc. has been successful in the U.S. It has limited growth
opportunities because it already controls much of the U.S. market for the parts it produces. The
natural next step is to conduct the same business in a foreign country.
d. Exchange Rate Risk. The exchange rate of the peso has weakened recently, which would allow
Fort Worth to build a plant in Mexico at a very low cost (by exchanging dollars for the cheap
pesos to build the plant).
Multinational Financial Management: An Overview ❖ 9
e. Political Risk. The political conditions in Mexico have stabilized in the last few months, so Fort
Worth should attempt to penetrate the Mexican market now.
ANSWER: None of the arguments by the consultant are logical. If SUVs are not sold in the Mexican
21. Valuation of Walmart’s International Business In addition to its stores in the United States,
Walmart Stores, Inc. has numerous retail units in Argentina, Brazil, Canada, China, Mexico, and the
United Kingdom. Consider that the value of Walmart is composed of two parts, a U.S. part (due to
business in the United States) and a non-U.S. part (due to business in other countries). Explain how to
determine the present value (in dollars) of the non-U.S. part assuming that you had access to all the
details of Walmart businesses outside the United States.
22. Impact of International Business on Cash Flows and Risk. Nantucket Travel Agency specializes
in tours for American tourists. Until recently, all its business was in the U.S. It just established a
subsidiary in Athens, Greece, which provides tour services in the Greek islands for American visitors.
This subsidiary rented a shop near the port of Athens. It also hired residents of Athens, who could
speak English and provide tours of the Greek islands. The subsidiary’s main costs are rent and
salaries for its employees and the lease of a few large boats in Athens that it uses for tours. American
tourists pay for the entire tour in dollars at Nantucket’s main U.S. office before they depart for
Greece.
a. Explain why Nantucket may be able to effectively capitalize on international opportunities such
as the Greek island tours.
b. Nantucket is privately-owned by owners who reside in the U.S. and work in the main office.
Explain possible agency problems associated with the creation of a subsidiary in Athens, Greece.
How can Nantucket attempt to reduce these agency costs?
ANSWER: The employees of the subsidiary in Athens are not owners and may have no incentive to manage
Multinational Financial Management: An Overview ❖ 10
c. Greece’s cost of labor and rent are relatively low. Explain why this information is relevant to
Nantucket’s decision to establish a tour business in Greece.
d. Explain how the cash flow situation of the Greek tour business exposes Nantucket to exchange
rate risk. Is Nantucket favorably or unfavorably affected when the euro (Greece’s currency)
appreciates against the dollar? Explain.
e. Nantucket plans to finance its Greek tour business. Its subsidiary could obtain loans in euros from
a bank in Greece to cover its rent, and its main office could pay off the loans over time.
Alternatively, its main office could borrow dollars and then periodically convert dollars to euros
to pay the expenses in Greece. Does either type of loan reduce the exposure of Nantucket to
exchange rate risk? Explain.
ANSWER: No. The euro loans would be used to cover euro expenses, but Nantucket would need
f. Explain how the Greek island tour business could expose Nantucket to country risk.
23. Valuation of an MNC. Rose Co. (a U.S. firm) has expanded its business by establishing networking
portals in numerous countries, including Argentina, Australia, China, Germany, Ireland, Japan, and
the U.K. It has cash outflows associated with the creation and administration of each portal. It also
generates cash inflows from selling advertising space on its website. Each portal results in cash flows
in a different currency. Thus, the valuation of Rose is based on its expected future net cash flows in
Argentine pesos after converting them into U.S. dollars, its expected net cash flows in Australian
dollars after converting them into U.S. dollars, and so on. Explain how and why the valuation of Rose
would change if most investors suddenly expected that that the dollar would weaken against most
currencies over time.
24. Uncertainty Surrounding an MNC’s Valuation. Carlisle Co. is a U.S. firm that is about to purchase
a large company in Switzerland for $20 million. This company, which produces furniture and sells it
locally (in Switzerland), is expected to earn large profits every year. Following its acquisition, the
company will become a subsidiary of Carlisle and will periodically remit the excess cash flows from
to its profits to Carlisle Co. Assume that Carlisle Co. has no other international business. Carlisle has
$10 million that it will use to pay for part of the Swiss company and will finance the rest of its
purchase with borrowed dollars. Carlisle Co. can obtain supplies from either a U.S. supplier or a
Swiss supplier (in which case the payment would be made in Swiss francs). Both suppliers are
Multinational Financial Management: An Overview ❖ 11
reputable and there would be no exposure to country risk when using one supplier. Is the valuation of
the total cash flows of Carlisle Co. more uncertain if it obtains its supplies from a U.S. firm or from a
Swiss firm? Explain briefly.
25. Impact of Exchange Rates on MNC Value. Olmsted Co. has small computer chips assembled in
Poland and transports the final assembled products to the parent company; the parent then sells these
products in the U.S. The assembled products are invoiced in dollars. It uses Polish currency (the
zloty) to produce these chips and assembles them in Poland. The Polish subsidiary pays the
employees in the local currency (zloty). Olmsted Co. finances its subsidiary operations with loans
from a Polish bank (in zloty). The parent of Olmsted sends sufficient monthly payments (in dollars) to
the subsidiary to repay the loan and other expenses incurred by the subsidiary. If the Polish zloty
depreciates against the dollar over time, will that have a favorable, unfavorable, or neutral effect on
the value of Olmsted Co.? Briefly explain.
26. Impact of Uncertainty on MNC Value. Minneapolis Co. is a major exporter of products to Canada.
Today, an event occurred that has increased the uncertainty surrounding the Canadian dollar’s future
value over the long term. Explain how this event might affect the valuation of Minneapolis Co.
27. Exposure of MNCs to Exchange Rate Movements. Arlington Co. expects to receive 10 million
euros in each of the next 10 years. It will need to obtain 2 million Mexican pesos in each of the next
10 years. The euro is presently valued at $1.38 and is expected to depreciate by 2 percent each year.
The peso is valued at $.13 and is expected to depreciate by 2 percent each year. Review the valuation
equation for an MNC. Do you think that the exchange rate movements will have a favorable or
unfavorable effect on the MNC?
28. Impact of a Recession on an MNC’s Value. If a U.S. recession occurred without any change in
interest rates, identify the part of the MNC valuation equation that would likely be most affected.
29. Exposure of MNCs to Exchange Rate Movements. Because of the low labor costs in Thailand,
Melnick Co. (based in the United States) recently established a major research and development
Multinational Financial Management: An Overview ❖ 12
subsidiary there. The wholly owned subsidiary was created to improve new products that Melnick can
sell in the United States (denominated in dollars) to U.S. customers. The subsidiary pays its local
employees in baht (the Thai currency). The subsidiary has a small amount of sales denominated in
baht, but its expenses are much larger than its revenue. Melnick has just obtained a large baht-
denominated loan that will be used to expand its subsidiary. The business that the parent company
conducts in the United States is not exposed to exchange rate risk. If the Thai baht weakens over the
next 3 years, will the value of Melnick Co. be favorably affected, unfavorably affected, or unaffected?
Briefly explain.
30. Shareholder Rights of Investors in MNCs. MNCs tend to expand more when they more easily
access funds by issuing stock. In some countries, shareholder rights are very limited and so the MNCs
are less able to raise funds by issuing stock. Explain why access to funding is more restricted for
MNCs based in countries where shareholder rights are limited.
31. MNC Cash Flows and Exchange Rate Risk. Tuscaloosa Co. is a U.S. firm that assembles phones in
Argentina and transports the final assembled products to the parent, which then sells products in the
U.S. The assembled products are invoiced in dollars. The Argentine subsidiary obtains some material
from China, and the Chinese exporter is willing to accept Argentine pesos as payment for these
exported materials. The Argentine subsidiary pays its employees in the local currency (pesos) and
finances its operations with loans from an Argentine bank (in pesos). Tuscaloosa Co. has no other
international business. If the Argentine peso depreciates against the dollar over time, will that have a
favorable, unfavorable, or neutral effect on Tuscaloosa Co.? Briefly explain.
32. MNC Cash Flows and Exchange Rate Risk. Asheville Co. has a subsidiary in Mexico that
develops software for its parent. It rents a large facility in Mexico and hires many people in Mexico to
work in this facility. Ashville Co. has no other international business. All operations are presently
funded by the parent company. All the software is sold to U.S. firms by the parent company and is
invoiced in U.S. dollars.
a. If the Mexican peso appreciates against the dollar, will this have a favorable effect, an
unfavorable effect, or no effect on Asheville’s value?
b. Asheville Co. plans to borrow funds to support its expansion in the U.S. The Mexican interest
rates are presently lower than U.S. interest rates, so Asheville obtains a loan denominated in
Mexican pesos to support its expansion in the U.S. Will the borrowing of pesos increase,
decrease, or have no effect on its exposure to exchange rate risk? Briefly explain.
ANSWER:
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
33. Estimating an MNC‘s Cash Flows. Biloxi Co. is a U.S. firm with a subsidiary in China. The
subsidiary reinvests half of its net cash flows into operations and remits half to the parent. Biloxi Co.
has expected cash flows of $10 million from domestic business and the Chinese subsidiary is
expected to generate 100 million Chinese yuan at the end of the year. The expected value of yuan at
the end of the year is $.13. What are the expected dollar cash flows of the parent, Biloxi Co., in one
year?
ANSWER:
34. Uncertainty Surrounding an MNC’s Cash Flows.
a. Assume that Bangor Co. (a U.S. firm) knows that it will have cash inflows of $900,000 from
domestic operations, cash inflows of 200,000 Swiss francs resulting from exports to Swiss
operations, and cash outflows of 500,000 Swiss francs at the end of the year. Although the future
value of the Swiss franc is uncertain, your best guess is that it will be worth $1.10 at the end of
this year. What are the expected dollar cash flows of Bangor Co?
b. Assume that Concord Co. (a U.S. firm) is in the same industry as Bangor Co. There is no political
risk that could have any impact on the cash flows of either firm. Concord Co. knows that it will
have cash inflows of $900,000 from domestic operations, cash inflows of 700,000 Swiss francs
from exports to Swiss operations, and cash outflows of 800,000 Swiss francs at the end of the
year. Is the valuation of the total cash flows of Concord Co. more uncertain or less uncertain than
the total cash flows of Bangor Co.? Explain briefly.
ANSWER:
35. Valuation of an MNC. Odessa Co., Midland Co., and Roswell Co. are U.S. firms in the same industry
and have the same valuation as of yesterday, based on the present value of the future cash flows of each
company. Odessa Co. obtains a large amount of its supplies invoiced in euros from European countries,
and all its sales are invoiced in dollars. Midland has a large subsidiary in Europe that does all its
business in euros and remits profits to the U.S. parent every year. Roswell Co. has no international
business. As of this morning, an event occurs that you believe will cause a substantial depreciation of
the euro against the dollar over time but assume this event will not change the business operations of the
firms mentioned. Which firm will have the highest valuation based on your expectations? Briefly
explain.
ANSWER
Multinational Financial Management: An Overview ❖ 15
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
This essay is intended to allow students to learn from their own application how the MNC’s valuation and
cash flows could be adversely affected by its exposure to one or more foreign currencies and country
economies.
Solution to Continuing Case Problem: Blades, Inc.
1. What are the advantages Blades could gain from importing from and/or exporting to a foreign country
such as Thailand?
ANSWER: The advantages Blades, Inc. could gain from importing from Thailand include potentially
lowering Blades’ cost of goods sold. If the inputs (rubber and plastic) are cheaper when imported
2. What are some of the disadvantages Blades could face as a result of foreign trade in the short run? In
the long run?
ANSWER: There are several potential disadvantages Blades, Inc. should consider. First of all, Blades
would be exposed to currency fluctuations in the Thai baht. For example, the dollar cost of imported
3. Which theories of international business described in this chapter apply to Blades, Inc. in the short
run? In the long run?
ANSWER: There are at least three theories of international business: the theory of comparative
advantage, the imperfect markets theory, and the product cycle theory. In the short run, Blades would
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4. What long-range plans other than establishing a subsidiary in Thailand are possible for Blades?
Would these other options be more suitable for the company?
ANSWER: Since Ben Holt is very unfamiliar with international business, and since Blades has never
Solution to Supplemental Case: Ranger Supply Company
This case is simply intended to force students to think about reasons for or against international business.
As with most cases, there are no perfect solutions, but there are some general conclusions that can be
drawn.
a. Some of the more obvious factors to consider are:
1. Competition. There are similar distributors in Canada, whereas Eastern Europe may not have an
3. Export Barriers. Either country could impose tariffs or quotas on the exports. Canada is less
likely than Eastern European countries to impose such restrictions.
4. Marketing Characteristics. Ranger would have an easier time adapting to the Canadian market.
The information about Eastern Europe firms would be more limited. Thus, Ranger would be
5. Exchange Rates. The future exchange rates of the Canadian dollar and currencies of Eastern
European countries could be relevant. Even if Ranger plans to invoice the exports in dollars, the
Multinational Financial Management: An Overview ❖ 17
Overall, most of the factors would favor Canada as the more reasonable market to pursue.
b. Recall that the reason for Ranger to expand overseas was to offset the anticipated U.S. demand for its
supplies. In this way, it could maintain its present production level and avoid problems with excess
Small Business Dilemma
In every chapter of this text, some of the key concepts are illustrated with an application to a small
sporting goods firm that conducts international business. The “Small Business Dilemma” in each
Developing a Multinational Sporting Goods Corporation
1. Is Sports Exports Company a multinational corporation?
2. Why are the agency costs lower for Sports Exports Company than for most MNCs?
3. Does Sports Exports Company have any comparative advantage over potential competitors in foreign
countries that could produce and sell footballs there?
ANSWER: The Sports Exports Company has a comparative advantage of applying an idea that has
been successful in the U.S. to other countries. If football becomes a popular idea in foreign countries,
4. How would Jim Logan decide which foreign markets he would attempt to enter? Should he initially
focus on one or many foreign markets?
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5. Sports Exports Company has no immediate plans to engage in direct foreign investment. However, it
might consider other less costly methods of establishing its business in foreign markets. What
methods might the Sports Exports Company use to increase its presence in foreign markets by
working with one or more foreign companies?
ANSWER: The Sports Exports Company may consider a licensing agreement whereby it has a
Running Your Own MNC
This project is provided in the text companion site. The exercises required within this project allow
students to recognize how the key concepts of each chapter can be applied to the multinational
International Investing Project
This project is provided in Appendix D in the back of the text and is also available in the text
companion site. It may be used as a project assignment that is to be completed by the end of the
semester. Since students select their own international investments, their projects vary. There is no
Discussion in the Board Room
This exercise is provided in Appendix E in the back of the text. It may be used as a project
assignment that is to be completed by the end of the semester. Possible answers to the discussion
questions are provided at the end of this Instructor’s Manual (at the end of Chapter 21). If you use this
Multinational Financial Management: An Overview ❖ 19
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
appendix for in-class discussion on a weekly basis, you may benefit from making a copy of the
discussion questions and possible answers provided at the end of the Instructors Manual so that you
have easy access to this exercise each week in class.