Question 1

US based multinationals can seek to insure their business operations in developing countries via ______.&#10;A) OPEC&#10;B) OPIC&#10;C) MEGA&#10;D) WTO

Accepted Answer

OPIC (Overseas Private Investment Corporation) offers political risk insurance for US businesses operating in developing countries. This insurance protects against losses due to events such as expropriation, political violence, and currency inconvertibility. OPEC (Organization of the Petroleum Exporting Countries) and WTO (World Trade Organization) do not provide insurance for business operations. MEGA is not a known organization related to insurance or international business operations.

Question 2

Reasons why multinational firms invest abroad include all except _______.&#10;A) Access to child labor&#10;B) Seeking new markets in which to sell&#10;C) Access to raw materials&#10;D) Technology acquisition

Accepted Answer

Access to child labor is illegal and unethical, therefore it is not a reason why multinational firms invest abroad. The other choices (B, C, and D) are plausible reasons for investing abroad.

Question 3

Examples of conflicting objectives between multinationals and host governments include all except ______.&#10;A) Ownership and use of research & development&#10;B) Economies of scale vs. domestic utilization&#10;C) Use of contracts to create stabile business environment vs. reduction of contract security&#10;D) Economies of scale vs. economies of scope

Accepted Answer

The conflicting objectives between multinationals and host governments include ownership and use of research & development, economies of scale vs. domestic utilization, and use of contracts to create stabile business environment vs. reduction of contract security. However, economies of scale vs. economies of scope is not typically a conflicting objective between multinationals and host governments.

Question 4

In the early 1900s the commanding heights of the economy included all except ______.&#10;A) Railroads&#10;B) Telecommunications&#10;C) Steel&#10;D) Heavy industry

Accepted Answer

Telecommunications did not yet exist as a major industry in the early 1900s. The other three choices were considered the commanding heights of the economy at that time.

Question 5

Placing limits on the amount of profits which are allowed to be returned to the home country of a multinational firm is known as _______.&#10;A) Expropriation&#10;B) Nationalization&#10;C) Repatriation&#10;D) Appropriation

Accepted Answer

Placing limits on the amount of profits which are allowed to be returned to the home country of a multinational firm is known as repatriation. Expropriation refers to the government seizure of assets or property without payment. Nationalization refers to a government taking control of the assets and operations of a company, often with compensation to the previous owners. Appropriation refers to the unauthorized taking or confiscation of property.

Question 6

Firms that use the news media to shape public opinion as to multinational presence in a given country is known as ______.&#10;A) Direct lobbying&#10;B) Appropriation&#10;C) Dumping&#10;D) Indirect lobbying

Accepted Answer

Indirect lobbying is the use of news media to shape public opinion in favor of a multinational presence in a given country. Direct lobbying involves direct communication with government officials, appropriation refers to the illegal acquisition of property or funds, and dumping is the practice of selling goods in a foreign market at a lower price than in the domestic market, often with the intention of driving local producers out of business.

Question 7

Forward integration is _____&#10;A) Concerned with the removal of middlemen in the operations process&#10;B) When a producer of soft drinks sets up its own bottling plant overseas&#10;C) Quickening the pace of production of a good or service&#10;D) Both A and B are correct

Accepted Answer

Forward integration involves a company taking control of the distribution and sales of its products by eliminating the middlemen. This can be achieved by setting up its own distribution channels or retail outlets. An example of this is when a soft drink producer sets up its own bottling plants overseas to control the production and distribution of its products. Therefore, both option A and option B are correct.

Question 8

Manipulation of a company's pricing structure for tax advantages is known as _______.&#10;A) Price controls&#10;B) Transfer costing&#10;C) Transfer pricing&#10;D) Variable pricing

Accepted Answer

Transfer pricing refers to the practice of setting prices for goods or services sold between different units of the same company. By manipulating the transfer pricing, companies can shift profits to subsidiaries located in countries with lower tax rates, thereby reducing their overall tax liability. This practice is often criticized for its lack of transparency and potential for abuse. Price controls, variable pricing, and transfer costing are not directly related to tax advantages.

Question 9

The lowering of a firm's costs via business expansion is known as ______.&#10;A) Economies of scope&#10;B) Economies of class&#10;C) Economies of scale&#10;D) Economies of skill&#10;

Accepted Answer

Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost. Businesses can achieve economies of scale through increased production and improved operational efficiencies.

Question 10

The United States typically ranks the highest in the most business friendly environment surveys.

Accepted Answer

While the United States ranks highly in many business-friendly environment surveys, it does not consistently rank the highest. Countries like Singapore, New Zealand, and Denmark often outperform the U.S. in ease of doing business rankings.

Question 11

The phrase &#34;Commanding Heights&#34; was coined by John Lennon.

Accepted Answer

The answer of The phrase &#34;Commanding Heights&#34; was coined by...

Question 12

Under the WTO, providing trade advantages for former colonies is legally permissible.

Accepted Answer

The answer of Under the WTO, providing trade advantages for...

Question 13

Repatriation of profits is not possible for US firms operating in France.

Accepted Answer

The answer of Repatriation of profits is not possible for...

Question 14

A new socialist government sweeping to power represents a political threat for a multinational firm.

Accepted Answer

The answer of A new socialist government sweeping to power...

Deck 10: Foreign Investment: Researching Risk