Management of Multinational Corporations Final Exam Questions
Course Introduction
This course explores the strategies, structures, and operations of multinational corporations (MNCs) in the global business environment. Students will examine how MNCs adapt to diverse cultural, legal, economic, and political contexts while managing international subsidiaries and global supply chains. Key topics include cross-border investment, international risk management, global leadership, corporate governance, and ethical considerations in multinational operations. The course also covers contemporary issues such as digital globalization, sustainability, and the impact of emerging markets on multinational management practices. Through case studies and practical applications, students will develop skills essential for effective decision-making in complex, multinational settings.
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International Business 15th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) A company starting out with a global focus,usually because of the international experience of its founders,is called a ________.
A) multinational enterprise
B) transnational company
C) strategically allied company
D) born-global company
Answer: D
Q2) Globalization refers to all economic transactions among countries.
A)True
B)False
Answer: False
Q3) Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________.
A) hiring host-country nationals who pay no taxes
B) taking advantage of taxation laws in foreign countries
C) sailing in international waters outside countries' tax jurisdiction
D) paying substantial port fees instead of taxes during stopovers
Answer: A
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Chapter 2: The Cultural Environments Facing Business
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Q1) Change agents intentionally cause or accelerate social and cultural change.
A)True
B)False
Answer: True
Q2) A firm that begins operating in a culturally similar foreign country will most likely face few necessary cultural adjustments.
A)True
B)False
Answer: True
Q3) When dealing in business with people from another county,it is good to use slang and tell jokes to put everyone at ease.
A)True
B)False
Answer: False
Q4) There is a strong correlation between the intensity of religious belief and attributes that lead to economic growth,such as obeying laws and thriftiness.
A)True
B)False
Answer: True
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) Proponents of ________ argue that individual interests are not as important as the welfare of the group.
A) pluralism
B) capitalism
C) collectivism
D) individualism
Answer: C
Q2) Laws on local business activities directly influence the operations of domestic and foreign companies in areas such as hiring and firing workers.
A)True
B)False Answer: True
Q3) A democracy grants the voting citizenry the power to alter the laws and structures of government.
A)True
B)False
Answer: True
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Chapter 4: The Economic Environments Facing Businesses
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Q1) The two main categories in the balance of payments are the ________.
A) merchandise exchange account and the services account
B) external debt and the unilateral transfers account
C) merchandise trade account and the capital account
D) current account and the capital account
Q2) The Gini coefficient estimates a country's ________.
A) gross national product
B) economic development
C) political and legal risk
D) income inequality
Q3) In the Economic Freedom Index,________ exhibit high economic freedom whereas ________ exhibit little to no economic freedom.
A) mixed economies; market economies
B) command economies; market economies
C) market economies; command economies
D) centrally planned economies; command economies
Q4) Uneven income distribution is largely a problem confined to poorer nations.
A)True
B)False
Q5) What is inflation? How does inflation affect international business?
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Chapter 5: International Trade and Factor-Mobility Theory
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Q1) The theory of absolute advantage holds that there are advantages to trade because different countries can produce different goods more efficiently than others.
A)True
B)False
Q2) All countries face the questions of what,how much,and with whom they should import and export.How they answer these questions primarily affects whether ________.
A) nontradable goods become tradable
B) products go through a lengthy life cycle
C) companies adhere to laissez-faire export policies
D) a company's present production location will be competitive
Q3) Which of the following statements most likely undermines the arguments for a strategic trade policy?
A) Entrepreneurs, rather than governments, should take business risks.
B) Developed countries have production lead time over developing countries.
C) If big companies can figure out what products to develop, so can governments.
D) Governments have limited resources, so industries with greater growth potential should be targeted.
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Chapter 6: Governmental Influence on Trade
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Q1) 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
Q2) It is sometimes contended that by imposing import controls a country might be able to increase its exports.This contention is premised on ________.
A) the country's simultaneous currency depreciation, which decreases the price of its exports
B) using the import taxes to institute efficiency measures in potential export industries
C) raising domestic prices in one industry so that the excess domestic profits in that industry can compensate for the cost of dumping products from another industry into foreign markets
D) getting other countries to maintain or relax their current import restrictions instead of escalating restrictions in a trade war
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Chapter 7: Cross-National Cooperation and Agreements
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Q1) The European Union is an example of ________ integration.
A) regional
B) relative
C) global
D) bilateral
Q2) Are commodity agreements effective? Why or why not?
Q3) Hudson Manufacturing is an MNE based in the U.S.with operations in Asia.The firm is considering expansion into the European Union.Which of the following questions is most relevant to the decision?
A) What is the primary language of most workers?
B) Which country has the best production location?
C) Which currency has the most favorable value of the euro?
D) Which country has the lowest tariffs for manufactured products?
Q4) Compared to the European Union,the North American Free Trade Agreement
A) has a stronger currency linkage due to the U.S. dollar
B) has more trade problems since it is a customs union
C) is significantly larger in population and total GNI
D) is slightly smaller in population and GDP
Q5) Identify and briefly compare the major regional trading groups in Latin America,Asia,and Africa.
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Chapter 8: Global Foreign-Exchange Markets
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Q1) Arbitrage is the purchase of foreign currency on one market for immediate resale on a foreign market in order to profit from a price discrepancy.
A)True
B)False
Q2) A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________.
A) it can only transfer funds in one direction
B) it is facing competition from some commercial banks
C) Mexican citizens do not like to use its services because it does not have strong ties with Mexican banks
D) Mexican citizens trust the banks but do not trust Western Union due to its heritage as a Western bank
Q3) In an FX swap,one currency is swapped for another on one date and then swapped back on a future date.
A)True
B)False
Q4) What is remittance income? What institutions in Mexico can handle remittance accounts? Why are some institutions used more frequently than others?
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Chapter 9: The Determination of Exchange Rates
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Q1) The IMF uses the quota system to determine how much a country may borrow from the Fund.
A)True
B)False
Q2) What is a black market? Under what conditions might one exist?
Q3) Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends.Which type of forecasting approach is Sarah most likely using?
A) fundamental
B) technical
C) application
D) economic
Q4) Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.
A)True
B)False
Q5) The Japanese yen is an example of a soft currency.
A)True
B)False
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Chapter 10: Global Capital Markets
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Q1) Each ADR represents ________ of the shares of the underlying foreign stock.
A) a multiple
B) 100
C) 1
D) ADRs have nothing to do with foreign stocks.
Q2) Global Positioning Solutions Inc.is a Utah-based company that ________.
A) provides location assistance for global executives who travel frequently
B) is a division of a banking syndicate in the Western part of the United States
C) assists firms that have foreign-exchange needs but that lack in-house foreign-exchange teams
D) started out by providing foreign exchange services that were not being offered by commercial banks
Q3) A situation in which several banks pool resources in the Eurocurrency market to extend credit to a borrower and spread the risk is known as ________.
A) credit collaboration
B) leverage equity financing
C) syndication
D) short-term Eurocurrency financing
Q4) What is an offshore financial center? What are the main characteristics of OFCs?
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Chapter 11: Globalization and Society
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Q1) Explain why the argument that "anything that is legal is ethical" is insufficient.
Q2) Quantum Footwear is an MNE that manufactures inexpensive shoes.Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common.Other clothing and footwear firms have recently faced criticism regarding the use of child labor,and Quantum executives want to avoid similar problems.Which of the following guidelines enforced by Quantum would LEAST likely be supported by the International Labor Organization?
A) establishing bridge schools
B) monitoring workplace safety
C) allowing children ages 10-15 to work a maximum of 4 hours per day
D) prohibiting abusive labor conditions
Q3) According to the text,which of the following has resulted from GE's Ecomagination initiative?
A) rising profitability for many GE products
B) increasing doubt among GE's foreign partners
C) reducing investments by GE due to poor returns
D) improving pollution levels near GE plants in China
Q4) What is extraterritoriality? Why is the concept controversial?
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Chapter 12: The Strategy of International Business
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Q1) A differentiation strategy works well in situations where there are many ways to differentiate a product or service and many buyers perceive these differences as having value.
A)True
B)False
Q2) Phillip is an international business manager with Corbin Manufacturing.Which of the following serves as an external influence on the business decisions that Phillip makes?
A) production plant locations
B) host country monetary policy
C) supply chain linkages
D) product design standards
Q3) What is coordination? Describe the factors that influence value chain coordination.
Q4) In the context of value chain analysis,the support activities of a firm include
A) outbound logistics, human resources, and information systems
B) production, marketing, and operations
C) shipping and customer service
D) research and development
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Chapter 13: Country Evaluation and Selection
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Q1) Companies are more likely to gain advantages by locating near competitors for all the following reasons EXCEPT to ________.
A) take advantage of competitors' research to pick an ideal location
B) attract multiple suppliers and personnel with specialized skills
C) agree with competitors on production limitations
D) attract buyers who want to compare suppliers
Q2) Carrefour has been more successful than Walmart in Europe,whereas Walmart has been more successful than Carrefour in the United States.What is the most likely reason for these results?
A) first-mover advantages
B) nationalistic preferences of consumers
C) lack of knowing how to adapt products
D) increased exporting fees and transportation costs
Q3) When income inequality is high in a specific country,the per capita GDP figures are more meaningful.
A)True
B)False
Q4) Why do companies often treat foreign reinvestment decisions differently than new foreign investment decisions?
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Chapter 14: Export and Import
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Q1) Boyce Dynamics,a U.S.maker of LED flashlights,fills unsolicited orders from foreign buyers.It has not proactively investigated international trade options.Boyce Dynamics is best categorized as a(n)________.
A) regular exporter
B) non-exporter
C) occasional exporter
D) domestic exporter
Q2) Which of the following is typically true of an export management company?
A) It is usually a division of a manufacturing company.
B) Most EMCs in the United States are large, representing a wide range of products and large number of companies.
C) It operates on a contractual basis for a manufacturer by helping obtain orders for its clients' products.
D) It usually takes title to products rather than act as an agent.
Q3) Major types of indirect intermediaries include export trading companies,distributors,and freight forwarding companies.
A)True
B)False
Q4) What is a born global? How has technology triggered the growth of born globals?
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) 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
Q2) A turnkey operation is a contract for the construction of an operating facility for a fee.
A)True
B)False
Q3) When no single company has control over a collaborative arrangement,________.
A) the operation may lack direction
B) none of the partners is responsible for legal violations
C) differences in corporate culture are likely to grow
D) one partner's interests are likely to be put ahead of the other partner's interests
Q4) According to the appropriability theory and the internalization theory,why would companies want to control their foreign operations?
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Chapter 16: The Organization of International Business
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Q1) The open source model is a hyperarchy that involves giving source code to volunteers who fix software bugs.
A)True
B)False
Q2) IBM puts investments,people,and work anywhere in the world based on the best mix of costs,skills,and environment and uses sophisticated strategies and technologies to support and coordinate activities.IBM most likely uses a ________ structure.
A) classical
B) product
C) neoclassical
D) locational
Q3) Martin Manufacturing is an MNE that centralizes authority to implement an extensive set of rules and procedures to govern a broad range of activities.Martin Manufacturing is most likely applying a system of ________.
A) market control
B) adjustment control
C) bureaucratic control
D) clan control
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Chapter 17: Marketing Globally
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Q1) Critics complain that pharmaceutical research budgets emphasize non-debilitating conditions common in developed countries rather than life-threatening diseases common in developing countries.People answering this criticism have contended that
A) correction of developed country conditions, such as balding, are necessary to stimulate developing country innovations that push global economic growth
B) very small portions of research budgets actually target these non-debilitating conditions
C) by being located almost entirely in developed countries, pharmaceutical companies lack access to locations where they can study diseases such as malaria and sleeping sickness
D) pharmaceutical companies cannot recoup expenses for research on some of the developing country problems, so governmental research centers and nonprofit foundations should handle this research
Q2) E-commerce facilitates the ability of consumers to compare prices from different distributors,which will most likely result in lower prices on products.
A)True
B)False
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Chapter 18: Global Manufacturing and Supply-Chain Management
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Q1) Which of the following best describes a major difference between supply chain management and logistics?
A) Supply chain management involves handling suppliers and customers.
B) Logistics involves longer distances and international distribution networks.
C) Supply chain management focuses on transportation and the storage of goods.
D) Logistics only encompasses the outbound flow of products and materials.
Q2) Vertical integration occurs when the company owns the entire supplier network or at least a significant part of it.
A)True
B)False
Q3) A company would most likely outsource abroad in order to gain access to more domestic products.
A)True
B)False
Q4) Quality is defined as ________.
A) meeting or exceeding the expectations of the customer
B) meeting the everyday low price expected by the customer
C) meeting international quality standards, such as ISO 9000
D) meeting internal quality standards
Q5) What are foreign trade zones? How are they used?
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Chapter 19: International Accounting and Finance Issues
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Q1) Assume a U.S.company sells merchandise to a French customer for $200,000 when the exchange rate is $1.5 per euro.At the end of the month,the euro is trading at 1.47,and in the middle of the next month when payment is received,the exchange rate is 1.53.If the U.S.company receives payment in dollars,what is the value of the sale at the end of the month for the U.S.company?
A) $200,000
B) $294,000
C) $300,000
D) $306,000
Q2) International accounting firms,such as Deloitte and KPMG,have the most influence on ________.
A) international and domestic tax laws
B) public record disclosure rules
C) global auditing practices
D) domestic legal systems
Q3) What is the LEAST likely reason that MNEs set arbitrary transfer prices?
A) take advantage of tax differences between countries
B) achieve economies of scale on a global level
C) circumvent national controls
D) manipulate profits
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Chapter 20: International Human Resource Management
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Q1) Expatriate failure,defined in broad terms,refers to the ________.
A) manager's premature return home due to poor job performance
B) manager's miscues, which give competitors a market advantage
C) unintentional dilution of the company's core competency
D) poor expatriate selection procedures of the MNE
Q2) What are the differences between ethnocentric,polycentric,and geocentric frameworks?
Q3) According to the text,which of the following is the most important competency in the expatriate selection process?
A) flexibility
B) business acumen
C) global mindset
D) geographic knowledge
Q4) There is growing consensus that human resource managers must hire,develop,reward,and retain people whose performance explicitly improves the
A) productivity of the firm's core competencies
B) fit between the firm's practices and industry standards
C) firm's engagement of political authorities
D) firm's responsiveness to customer complaints
Page 22
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