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These are decisions about how to manage the firm's financial resources most efficiently.
Money management decisions
This is defined as the mix of debt and equity used to finance a business.
In general, firms prefer to hold cash balances at a centralized depository for all of the following reasons except
By pooling cash reserves centrally, the firm can deposit larger amounts
It enables the firm to invest a larger amount of cash reserves in short-term, highly liquid financial instruments that earn a lower interest rate
If the centralized depository is located in a major financial center, it has access to information about good short-term investment opportunities that the typical foreign subsidiary would lack
The firm can reduce the total size of the cash pool it must hold in highly liquid accounts
Firms should build a strong corporate culture and an informal management network for transmitting information and knowledge within the organization if they are pursuing a(n)
Global standardization strategy
What is the reason for a decline in pursuing an ethnocentric staffing policy in most international businesses?
It is expensive to implement
It limits advancement opportunities for host-country nationals
A gap can arise between host-country managers and parent-country managers
The lack of management transfers from home to host countries
Which dimension of Mendenhall and Oddou's study suggests that an expatriate with high self-esteem, self-confidence and mental well-being is likely to succeed in a foreign job posing?
Which of the following statements is false?
Product reliability may be a more important attribute in most advanced countries
Consumers in highly developed countries tend to build a lot of extra performance attributes into their products
Consumers in the most developed countries are often not willing to sacrifice their preferred attributes for lower prices
Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind
When a firm emphasizes personal selling rather than mass media advertising in the promotional mix, the firm is using a
For _____ to work, the firm must normally have a profitable position in another national market, which it can use to subsidize aggressive pricing in the market it is trying to monopolize.
Experience curve pricing
_____ is the activity that controls the transportation of physical materials through the value chain, from procurement through production and into distribution.
A company that wants to reduce set-up time for complex equipment, increase the utilization of individual machines through better scheduling and improve quality control at all stages of the manufacturing process should adopt
Diseconomies of scale
Flexible machine technology
Minimum efficient scale
Asian firms that did not have access to export credits to finance their international trade after the1997 crisis turned to
U.S. backed loan payments
Foreign direct investment
Domestic market expansion
Which of the following statements about value creation by an international business in a foreign market is false?
Value depends on the suitability of the product offering to that market
Greater value translates into an ability to charge lower prices
Value depends on the nature of indigenous competition
Greater value translates into an ability to build sales volume more rapidly
The _____ entrant is more likely than the _____ entrant to be able to capture the first-mover advantages associated with demand preemption, scale economies and switching costs.
Small scale; large scale
Small scale; moderate scale
Large scale; small scale
Moderate scale; large scale
The norms and values systems that are shared among the employees of a company are referred to as
Regardless of a firm's domestic structure, its international division tends to be organized on
The main problem with this structure is the limited voice it gives to area or country managers, since it makes them subservient to product division managers.
Worldwide product divisional structure
Worldwide area structure
Global matrix structure
Due to the high level of interdependence, the costs of controlling _____ firms are higher than the costs of controlling firms that pursue other strategies.
_____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital.
Which of the following statements is not true?
The way to increase the profitability of a firm is to create more value
The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products
The more value customers place on a firm's products, the lower the price the firm is able to charge for those products
The price a firm charges for a good or service is typically less than the value the customer places on that good or service
The _____ activities are basically concerned with creating the product, marketing and delivering the product to buyers and providing support and after-sales service.
Which of the following is an adverse effect of the integration of international capital market facilitated by technology?
"Shocks" that occur in one financial center now spread around the globe very quickly
Due to advances in communications and data processing technology, the international capital market never sleeps
Shocks in national financial markets have extensive long-term impact on other markets due to high correlation between movements in national equity markets
The real cost of recording, transmitting and processing information has gone up by 95 percent between 1964 and 1990
According to Harvard economist Martin Feldstein _____ supports long-term cross-border capital flows.
The risks that arise from volatile changes in exchange rates are known as
Interest rate risks
Foreign exchange risks
The simultaneous purchase and sale of a given amount of foreign exchange for two different value dates is referred to as a
A(n) _____ involves the free flow of products and factors of production between member countries and the adoption of a common external trade policy, along with a common currency, harmonization of members' tax rates and a common monetary and fiscal policy.
Free trade area
MERCOSUR originated as a(n) _____ between Brazil and Argentina in1988.
Free trade pact
Free trade zone
According to Alexander Yeats,
The trade diversion effects of MERCOSUR outweigh its trade creation effects
The fastest growing items in intra-MERCOSUR trade were capital-intensive goods produced efficiently in the member countries
MERCOSUR countries will be able to compete globally once the group's external trade barriers come down
Countries with more efficient manufacturing enterprises are getting a level playing field because of MERCOSUR's reduction in trade barriers
If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of a(n)
According to the internalization theory, all of the following are drawbacks of licensing as a strategy for exploiting foreign market opportunities, except
Licensing does not grant control over manufacturing, marketing and to a licensee in return for a royalty fee
Licensing may result in a firm's giving away its know-how to a potential foreign competitor
Licensing does not give the firm the tight control over manufacturing, marketing and strategy that may be required to profitably exploit its advantage
A firms capabilities such as the management, marketing and manufacturing are often not amenable to licensing
The _____ suggests that a firm will establish production facilities where foreign assets or resource endowments that are important to the firm are located.
Product life cycle
Strategic behavior theory
Multipoint competition theory
According to the _____ view of FDI, MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.
This is a direct restriction on the quantity of some good that may be imported into a country.
Ad valorem tariff
The _____ specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.
Buy America Act
The product life cycle theory was developed by
Identify the theory that can be interpreted as justifying some limited government intervention to support the development of certain export-oriented industries.
Theory of national competitive advantage
Theory of comparative advantage
Theory of absolute advantage
The main tenet of mercantilism was that it was in a country's best interest to maintain a trade
Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?
The justice theory
The rights theory
The notion that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage was developed by
John Stuart Mill
According to John Rawls,
Each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others
Freedom of speech and assembly is the single most important component in a justice system
Equal basic liberty is only possible in a pure market economy
Inequalities in a justice system are not to be tolerated under any circumstance
An act, as simple as shaking hands when meeting new people is an example of
A Japanese executive's ritual of presenting a business card to a foreign business executive is an example of
The emergence of class-consciousness in Great Britain can be attributed to
The relative lack of class mobility
A high degree of social mobility
An extreme emphasis on individualism
Most of the population perceiving itself to be middle class
Identify the incorrect statement pertaining to a country's political economy.
It is independent of the culture of a nation
It is a combination of interdependent political, economic and legal systems
Its various systems interact and influence each other
Its interacting systems affect the level of economic well-being
The benefits of doing business in a country are a function of all of the following, except
The size of the market
Its past growth
Its present wealth
Its future growth prospects
GATT's Uruguay Round of negotiations resulted in all of the following except that it
Further reduced trade barriers
Extended GATT to cover services as well as manufactured goods
Provided enhanced protection for patents, trademarks and copyrights
Established the International Monetary Fund
At the Doha Round of the WTO in late 2001
The WTO was established
GATT was extended to include services
World trade volume increased
An agenda was established to phase out subsidies to agricultural producers
Many of the world's poorer nations suffering from economic stagnation are being held back by
Large debt burdens
Strong protection of property rights
Economic policies that create wealth
Decreased barriers to free trade
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