Chapter1GlobalizationandtheMultinationalEnterprise1.1MultipleChoiceandTrue/FalseQuestionsWhichofthefollowingarecriticaltoafirmtryingtoreachthetopofthe"firmvaluepyramid"?A)anopenmarketplacehighqualitystrategicmanagementaccesstocapitalalloftheaboveAwell-established,largefirmU.S.-basedMNEwillprobablynotbeabletoovercomewhichofthefollowingobstaclestomaximizingfirmvalue?anopenmarketplacehighqualitystrategicmanagementaccesstocapitalnoneoftheaboveThreenecessaryconditionsforafirmtoreachthetopofthe"firmvaluepyramid"areanopenmarketplace,highqualitystrategicmanagement,andaccesstocapital.Awell-established,largeChina-basedMNEwillprobablybemostadverselyaffectedbywhichofthefollowingelementsoffirmvalue?anopenmarketplacehigh-qualitystrategicmanagementaccesstocapitalaccesstoqualifiedlaborpoolAwell-established,large,Brazil-basedMNEwillprobablybemostadverselyaffectedbywhichofthefollowingelementsoffirmvalue?anopenmarketplacehigh-qualitystrategicmanagementC)accesstocapitalD)accesstoqualifiedlaborpoolThetheorythatsuggestsspecializationbycountrycanincreaseworldwideproductionis A)thetheoryofcomparativeadvantagethetheoryofforeigndirectinvestmenttheinternationalFishereffectthetheoryofworkingcapitalmanagementWhichofthefollowingwouldNOTbeawaytoimplementcomparativeadvantage?A)IBMexportscomputerstoEgypt.ComputerhardwareisdesignedintheUnitedStatesbutmanufacturedandassembledinKorea.WaterofthegreatestpurityisobtainedfromwellsinOregon,bottled,andexportedworldwide.Alloftheaboveareexamplesofwaystoimplementcomparativeadvantage.WhichofthefollowingwouldNOTbeconsideredafeatureofcomparativeadvantage?A)ExportersinCountryAsellgoodsorservicestounrelatedimportersinCountryB.FirmsinCountryAspecializeinmakingproductsthatcanbeproducedrelativelyefficiently,givenCountyA'sendowmentoffactorsofproduction.FirmsinCountryBdolikewisethusmaximizingthecombinedoutputofCountriesAandB.TradeexistsbetweenCountiesAandBbecauseofspecializedfactorsofproductionthatcannotbemovedamongcountries.Alloftheabovearefeaturesofcomparativeadvantage.Ofthefollowing,whichwouldNOTbeconsideredawaythatgovernmentinterfereswithcomparativeadvantage?A)tariffsB)managerialskillsC)quotasD)othernon-tariffrestrictionsComparativeadvantageshiftsovertimeaslessdevelopedcountriesbecomemoredevelopedandrealizetheirlatentopportunities.Comparativeadvantagewasoncethecornerstoneofinternationaltradetheory,buttodayitisarchaic,simplistic,andirrelevantforexplaininginvestmentchoicesmadebyMNEs.Indeterminingwhyafirmbecomesmultinationaltherearemanyreasons.Onereasonisthatthefirmisamarketseeker.WhichofthefollowingisNOTareasonwhymarketseekingfirmsproduceinforeigncountries?A)satisfactionoflocaldemandintheforeigncountrysatisfactionoflocaldemandinthedomesticmarketspoliticalsafelyandsmalllikelihoodofgovernmentexpropriationofassetsD)Alloftheabovearemarket-seekingactivities. investmentsaredesignedtopromoteandenhancethegrowthandprofitabilityofthefirm. investmentsaredesignedtodenythosesameopportunitiestothefirm'scompetitors.A)Conservative;aggressiveB)Defensive;proactiveC)Proactive;defensiveD)Aggressive;proactiveWhichofthefollowingisNOTconsideredtobeatypeofcompetitiveadvantagethatmaybeenjoyedbyanMNE?managerialandmarketingexpertisesuperiortechnologyduetoinvestmentinresearchanddevelopmentC)increasedagencycostsD)differentiatedproductsWhichofthefollowingisNOTconsideredtobeatypeofcompetitiveadvantagethatmaybeenjoyedbyanMNE?competitivenessintheirhomemarketsforeignexchangeriskseconomiesofscaleeconomiesofscopeThephaseoftheglobalizationprocesscharacterizedbyimportsfromforeignsuppliersandexportstoforeignbuyersiscalledthedomesticphase.multinationalernationaltradephase.import-exportbankingphase.TheauthorsdescribethemultinationalphaseofglobalizationforafirmasonecharacterizedbytheA)ownershipofassetsandenterprisesinforeigncountries.potentialforinternationalcompetitorsorsupplierseventhoughallaccountsarewithdomesticfirmsandaredenominatedindollars.importsfromforeignsuppliersandexportstoforeignbuyers.requirementthatallemployeesbemultilingual.Ofthefollowing,whichwasNOTmentionedbytheauthorsasanincreaseinthedemandsoffinancialmanagementservicesduetoincreasedglobalizationbythefirm?evaluationofthecreditqualityofforeignbuyersandsellersforeignconsumermethodofpaymentpreferencescreditriskmanagementD)evaluationofforeignexchangeriskTheauthorsdescribethemultinationalphaseofglobalizationforafirmasonecharacterizedbytheownershipofassetsandenterprisesinforeigncountries.potentialforinternationalcompetitorsorsupplierseventhoughallaccountsarewithdomesticfirmsandaredenominatedindollars.importsfromforeignsuppliersandexportstoforeignbuyers.requirementthatallemployeesbemultilingual.Ofthefollowing,whichwasNOTmentionedbytheauthorsasanincreaseinthedemandsoffinancialmanagementservicesduetoincreasedglobalizationbythefirm?evaluationofthecreditqualityofforeignbuyersandsellersforeignconsumermethodofpaymentpreferencescreditriskmanagementD)evaluationofforeignexchangeriskTypically,afirminitsdomesticstageofglobalizationhasallfinancialtransactionsinitsdomesticcurrency.22)AfirmintheInternationalTradePhaseofGlobalizationmakesallforeignpaymentsinforeigncurrencyunitsandallforeignreceiptsindomesticcurrencyunits.receivesallforeignreceiptsinforeigncurrencyunitsandmakesallforeignpaymentsindomesticcurrencyunits.bearsdirectforeignexchangerisk.noneoftheabove.TheexposuretoforeignexchangeriskknownasTranslationExposuremaybedefinedaschangesinreportedowners'equityinconsolidatedfinancialstatementscausedbyachangeinexchangerates.theimpactofsettlingoutstandingobligationsenteredintobeforechangeinexchangeratesbuttobesettledafterchangeinexchangerates.thechangeinexpectedfuturecashflowsarisingfromanunexpectedchangeinexchangerates.alloftheabove.Thetwinagencyproblemslimitingfinancialglobalizationarecausedbythesetwogroupsactingintheirownself-interestsratherthantheinterestsofthefirm.rulersofsovereignstatesandunsavorycustomsofficialscorporateinsidersandattorneyscorporateinsidersandrulersofsovereignstatesattorneysandunsavorycustomsofficialsChapter1 GlobalizationandtheMultinationalEnterpriseexercise answer1A 2D 3T 4A 5、C 6、A 7、D 8、D 9B 10、T 11、F 12C13、C14、C15、B16、C17、A18、B19、A20、B21、T22、C23、A24、C25、C26、B27、C28、A29、A30、CTABLE1.1Usetheinformationinthetabletoanswerfollowingquestion(s).RefertoTable1.1.AproductionunitinAustriahasa/an overaproductionunitinRussiain .absolutedisadvantage;digitalcamerasabsolutedisadvantage;snowboardsabsoluteadvantage;bothcamerasandsnowboardsnoneoftheaboveRefertoTable1.1.AustriahasalargerrelativeadvantageoverRussiaintheproductionof atratioof .snowboards;5to4cameras;8to3snowboards;8to3cameras;3to8RefertoTable1.1.AssumenotradebetweenRussiaandAustria.Ifeachcountryput50%oftheirproductionunitsintoeachproduct,thetotalnumberofsnowboardsanddigitalcamerasproducedbythetwocountriescombinedare and .15,000snowboards;3,000digitalcameras6,000snowboards;4,000digitalcameras2,750digitalcameras;6,750snowboards15,000digitalcameras;1,000snowboardsRefertoTable1.1.IftradetakesplaceatBrazil'sdomesticprice, snowboardswillberequiredtoobtain1digitalcamera.42and2/3C)1.25D)0.25RefertoTable1.1.IfeachcountryspecializesintheirproductionwithAustriaproducingonlydigitalc