Multinational Enterprise Management Exam Bank
Course Introduction
Multinational Enterprise Management explores the strategic, operational, and organizational challenges faced by companies operating across international borders. This course examines the structures, policies, and practices that drive global success, including entry modes, supply chain management, cross-cultural communication, and risk assessment. Students will analyze the influence of economic, legal, and political environments on multinational enterprise decisions and study real-world cases to develop managerial skills required for effective leadership in a globalized business landscape.
Recommended Textbook
International Business Environments Operations 14th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) Visible exports and imports are ________.
A) merchandise imports and exports
B) the sum total of goods and services traded
C) international transactions paid for in money rather than barter
D) typically a country's least common international economic transactions
Answer: A
Q2) Which of the following best explains why international business has grown rapidly in the past few decades?
A) the end of the political schism between the Communist and non-Communist blocs
B) greater income equality in most countries
C) growing concern about climate change
D) increased concerns about terrorism
Answer: A
Q3) A foreign direct investment occurs when ________.
A) a company owns at least 25% of a foreign firm
B) a company has a controlling interest in a foreign company
C) foreign ownership is in private rather than government securities
D) a foreign firm agrees to a licensing agreement with a large conglomerate
Answer: B
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) Cultural change may come by choice or imposition.
A)True
B)False
Answer: True
Q2) Organizing work differently to improve productivity will likely fail ________.
A) if the work force has a low tolerance for authoritarianism
B) if workers participate in planning the improvement
C) unless changes are compatible to competitor's practices
D) if changes interfere with strongly held value systems
Answer: D
Q3) If an MNE convinced a popular priest that its vitamin-enriched soft drink would benefit parishioners' health,the MNE would be using ________ to help bring about change.
A) participation
B) reward sharing
C) an opinion leader
D) materialistic motivation
Answer: C
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system.
A) civil
B) common
C) customary
D) mixed
Answer: D
Q2) Wharton Enterprises,a U.S. firm,manufactures small kitchen appliances. The firm has recently developed an innovative blender design that Wharton executives anticipate being very profitable. Currently,Wharton has production facilities in the U.S. and China. Wharton executives are trying to determine where the new product should be manufactured. Which of the following best supports a decision to manufacture the new product in the U.S. instead of China?
A) Intellectual property rights are strongly protected by U.S. patent laws.
B) A strategic marketing plan can be quickly developed in the U.S.
C) Contract enforcement is a simple process in the U.S.
D) The U.S. is experiencing an economic recession.
Answer: A
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Chapter 4: The Economic Environments Facing Businesses
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Q1) In the U.S.,the unemployment rate indicates the ________.
A) percentage of the labor force that wants to work full-time but can only find part-time employment
B) number of people who have stopped looking for work because full-time jobs are unavailable
C) percentage of unemployed workers seeking paid work relative to the total labor force
D) number of workers eligible for government services and unemployment benefits
Q2) The calculation of GNI per capita takes into account the differences in the cost of living from one country to another.
A)True
B)False
Q3) The United Nations' ________ measures life expectancy,educational attainment,and the standard of living in a given country.
A) Human Development Index
B) Emerging Economic Stability
C) Genuine Progress Indicator
D) Net National Product
Q4) What issues complicate international economic analysis?
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Chapter 5: Globalization and Society
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Q1) What types of payments are legal and illegal under the Foreign Corrupt Practices Act (FCPA)of the United States? Provide an example.
Q2) 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
Q3) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as ________.
A) competitive advantage
B) the Kyoto Protocol
C) sustainability
D) externality
Q4) The teleological approach asserts that individuals make moral judgments independent of consequences.
A)True
B)False
Q5) What motivations do companies have to act responsibly? How can codes of conduct help firms to act ethically?
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Chapter 6: International Trade and Factor Mobility Theory
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Q1) The most internationally mobile factor of production is ________.
A) labor
B) management
C) long-term capital
D) short-term capital
Q2) Analysts conclude that the finite supply of natural resources will most likely ________.
A) cause a higher proportion of world trade to occur among developed countries
B) cause a higher proportion of world trade to occur among developing countries
C) serve as an advantage for developing countries in their sales to developed countries
D) create a greater portion of world trade in the form of services
Q3) All of the following factors most likely led to Costa Rica's attraction of high-tech FDI EXCEPT the country's ________.
A) demand for high-tech products
B) literacy rate
C) quality of life
D) political stability
Q4) What is the country similarity theory? According to this theory,what factors affect trade patterns?
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Chapter 7: Governmental Influence on Trade
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Q1) The argument for using protectionism to bring about industrialization in developing countries presumes that gains will occur because the industry will become internationally competitive.
A)True
B)False
Q2) 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
Q3) Import substitution is a program promoting local production of products that would otherwise be imported.
A)True
B)False
Q4) The most common type of tariff is the export tariff.
A)True
B)False
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) As companies expand internationally,they must change their organizational structure and operating strategies to take advantage of regional trading groups.
A)True
B)False
Q2) The shifting of resources from inefficient to efficient companies as trade barriers fall produces static effects.
A)True
B)False
Q3) An example of an effective commodity agreement is ________.
A) the Organization of Petroleum Exporting Countries
B) the Organization of Petroleum Importing Countries
C) the International Tin Alliance
D) the International Cotton Alliance
Q4) Most trade groups contain countries in the same area of the world,even though neighboring countries usually lack a common history and interests.
A)True
B)False
Q5) Are commodity agreements effective? Why or why not?
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Chapter 9: Global Foreign-Exchange Markets
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Q1) Trading activity has increased in recent years due to the growing importance of foreign exchange as an alternative asset and the expanded emphasis on hedge funds.
A)True
B)False
Q2) What is currency speculation? Why is it risky?
Q3) The bid is the price at which the trader is willing to sell foreign currency.
A)True
B)False
Q4) A major challenge faced by Western Union in transferring money between the United States and Mexico is that Mexican citizens trust the banks but do not trust Western Union due to its reliance on global banks.
A)True
B)False
Q5) Companies use the foreign exchange market to convert money for use in financial transactions.
A)True
B)False
Q6) In a short essay,discuss how companies use foreign exchange.
Q7) What is a futures contract? What institutions handle futures contracts?
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Chapter 10: The Determination of Exchange Rates
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Q1) The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.
A)True
B)False
Q2) If the euro continues to remain strong against the U.S. dollar,which of the following strategies would make the most sense for BMW?
A) It might be advantageous for them to consider exporting from Germany to the U.S. to take advantage of cheaper costs.
B) It might increase its manufacturing capacity in the United States to take advantage of the cheaper dollar.
C) It might consider raising prices in the United States to earn more profits for BMW.
D) It really doesn't make any difference to BMW since consumers will buy the cars no matter what they cost.
Q3) The Big Mac Index suggests that exchange rates should leave Big Mac hamburgers costing the same in the U.S. as abroad.
A)True
B)False
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12
Chapter 11: The Strategy of International Business
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Q1) A useful way to understanding the purpose of strategy is to think of the firm as a(n)________,composed of a series of distinct activities,including production,marketing,materials management,R & D,human resources,information systems,and the firm infrastructure.
A) activity network
B) value constellation
C) task succession
D) value chain
Q2) What is the Industry Organization (IO)paradigm? Discuss the underlying assumptions of this model.
Q3) The framework that managers use to make decisions that maximize their companies' value creation performance is referred to as a strategy.
A)True
B)False
Q4) Digitization has altered location economics and established a new global model for service providers in the financial and legal industries.
A)True
B)False
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Chapter 12: Country Evaluation and Selection
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Q1) Why do most companies examine expansion proposals one at a time rather than comparing various expansion proposals? Do you think this is effective? Why or why not?
Q2) Executives at Wilson Enterprises need to determine how to leverage and improve the firm's existing competencies on a global basis. What are the two most basic questions that they must answer?
A) Which markets should we serve and where should production be located to serve those markets?
B) What are the short-term competitive advantages of the project and what is the return on investment?
C) What is the total investment required and what are the managerial resources needed to supervise the investment?
D) What is the availability of land and what is the cost of labor?
Q3) In a concentration strategy for international expansion,a company goes first to one or a few countries and builds up fast there before going to other countries.
A)True
B)False
Q4) Why do companies engage in international harvesting or divestment?
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Chapter 13: Export and Import
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Q1) In what is known as direct exporting,the exporter sells goods directly to or through an independent domestic intermediary in the exporter's home country that then exports the products to foreign markets.
A)True
B)False
Q2) Companies are likely to export products abroad in all of the following situations EXCEPT which one?
A) when their average cost per unit of home country production declines substantially by increasing output
B) when they want to use the riskiest but most profitable method to engage international trade
C) when they aim to increase degree of market diversification
D) when they are new to international business
Q3) Pender Pet Products is considered an opportunistic importer because the firm seeks products around the world that it can import and sell profitably to domestic consumers.
A)True
B)False
Q4) What role does the customs agency of a government play?
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Page 15
Chapter 14: Direct Investment and Collaborative Strategies
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Q1) Which of the following is an example of an exclusive license agreement?
A) Three licensees have worldwide rights to sell the product worldwide for three years, during which time no other companies can use the asset.
B) The licensee is currently the only company using the intangible property, but the licensor has rights to add other licensees.
C) One licensee gets rights for the north island of New Zealand, a second licensee gets rights for the south island of New Zealand, and the licensor agrees to add no new licensees to New Zealand for the next five years.
D) The licensee and licensor use the property in the same market.
Q2) What is an international consortium?
A) the ownership of a company by a government and a foreign company
B) an agreement signed by most governments to protect intellectual property rights
C) an international joint venture owned by at least three organizations
D) an agreement between two or more governments to provide for reciprocal foreign investment protection
Q3) What is a management contract? What are the potential advantages to both parties in the contract?
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Page 16
Chapter 15: The Organization of International Business
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Q1) The keiretsu structure long used by Japanese companies is an example of virtual organization.
A)True
B)False
Q2) Horizontal differentiation is concerned with how the managers of a firm decide to divide the company into discrete subunits.
A)True
B)False
Q3) Describe how an MNE might use reports as a control mechanism.
Q4) A hyperarchy is ________.
A) a form of structure with precise superior and subordinate relationships
B) a form of structure that relies on extensive centralization
C) a large-scale, self-organizing community
D) analogous to a hierarchy
Q5) A firm's vertical differentiation determines where in its organization structure managers have decided to concentrate decision-making authority.
A)True B)False
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Chapter 16: Marketing Globally
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Q1) Agreements on international product standards are hampered by all the following factors EXCEPT ________.
A) that standardization increases production costs
B) consumer reluctance to change
C) the cost of redesigning and retooling
D) governments' desires to protect investments
Q2) A pull rather than a push strategy is most likely preferable when ________.
A) self-service is not predominant
B) the price of a product is high relative to incomes
C) there are few governmental restrictions on advertising
D) there are a large number of languages and a low literacy rate
Q3) Which of the following statements is important to companies in order for them to gain contracts with foreign distributors?
A) Convince the distributors that the product and company are viable.
B) Offer high margins so distributors will compete to get the account.
C) Determine the distribution gap before signing a contract.
D) Establish in-house distribution to demonstrate what is desired.
Q4) The most common way of identifying market segments is through demographics.
A)True
B)False
Page 18
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Chapter 17: Global Manufacturing and Supply Chain Management
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Q1) Which of the following is one of the main purposes of FTZs?
A) discouraging companies to locate in the host country
B) forcing countries to pay extra duties
C) discouraging companies from using JIT
D) allowing countries to defer duties
Q2) Jeff manages global purchasing for his employer and needs to select a new supplier. Jeff should most likely ________.
A) implement e-commerce
B) focus mainly on purchase price
C) establish clear performance expectations
D) maintain the same type of relationship with every supplier
Q3) Which term refers to the network that links together the different aspects of the value chain and coordinates materials,information,and funds from the initial raw-material supplier to the ultimate customer?
A) logistics strategy information system
B) materials management device
C) customer service
D) supply chain
Q4) What are foreign trade zones? How are they used?
Page 19
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Chapter 18: International Accounting Issues
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Q1) Assume that a U.S.-based MNE has operations in Germany and that the revenues and expenses are mostly incurred in euros. Which translation method is the MNE most likely to use?
A) current-rate method
B) temporal method
C) translate-restate method
D) consolidation method
Q2) The accounting principle that relates to more,rather than less,extensive footnotes in reports is known as ________.
A) secrecy
B) measurement
C) conservatism
D) transparency
Q3) U.S.-based MNEs do not like to use the balanced scorecard for evaluation performance because it does not take into consideration international differences.
A)True
B)False
Q4) How do exchange rates affect budgets used to evaluate performance in MNEs?
Q5) In a brief essay,discuss the concepts of transfer pricing and hedging.
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Chapter 19: The Multinational Finance Function
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Q1) What is an offshore financial center? What are the main characteristics of OFCs?
Q2) Which term refers to the potential for change in expected cash flows that arises from the pricing of products and the location of investments?
A) translation exposure
B) transaction exposure
C) economic exposure
D) hedge exposure
Q3) Which of the following is unique to foreign project assessment in the capital budgeting decision?
A) Project cash flows must be determined.
B) Parent cash flows and project cash flows are the same.
C) Local tax issues affect the determination of free cash flows and the remittance of earnings.
D) Inflation is not an issue, because companies use the same inflation rate in both the domestic and international setting in order to make the analysis more comparative.
Q4) You are the chief financial officer at an MNE. What are your main responsibilities in this position? What taxation issues have a significant effect on the decisions you make?
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Chapter 20: International Human Resources
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Q1) There is a strong yet inconsistent relationship between the strategic performance of an MNE and the decisions it has made in managing its human resources.
A)True
B)False
Q2) The ________ of compensation determines an expatriate's compensation on the prevailing pay scales in the locale of the foreign assignment.
A) headquarters-based method
B) home-based method
C) culturally based method
D) host-based method
Q3) All of the following would most likely improve the successful repatriation of expatriates EXCEPT ________.
A) encouraging repatriated workers to take sabbaticals upon return
B) developing mentoring programs to smooth transitions
C) integrating foreign assignments into career plans
D) providing repatriated workers with desirable jobs
Q4) What types of employees are increasingly being chosen for expatriate assignments? What characteristics are firms seeking when selecting expatriates?
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