Deck 11: Multinational Corporations

Question 1

As MNCs moved into the fifth tier of internationalization,their strategic thinking was more influenced by national boundaries.

Answer 1

False

Question 2

The OECD is a group of 33 nations formed in 1961 as an outgrowth of cooperation to rebuild Europe after World War II.

Answer 2

True

Question 3

In many fifth-tier companies,there is a strong trend toward more centralized authority rather than more "statelessness."

Answer 3

True

Question 4

The Sullivan Principles was a 1977 code of conduct that required multinational corporations in South Africa to do business in a nondiscriminatory way.

Question 5

Corporations are formed under national incorporation laws.

Question 6

MNCs are all similar in their organizational structures and operations.

Question 7

The primary motive of companies investing in LDCs is getting an adequate return on capital invested.

Question 8

Almost all FDI comes from multinational corporations.

Question 9

Even without making direct investments in a nation,powerful MNCs can shake its economy.

Question 10

When an MNC invests funds to acquire a foreign company,this is called a foreign direct investment.

Question 11

The single measure that best captures the activity and power of MNCs is portfolio investment.

Question 12

Voluntary CSR is the full corrective for flaws in markets.

Question 13

The OECD Guidelines for Multinational Enterprises is a set of 16 broadly worded principles about protecting and conserving the natural environment.

Question 14

Bluewashing is a report from a corporation about its actions in support of the 10 Global Compact principles.

Question 15

The Global Compact is a code of conduct that enforces its principles.

Question 16

In global production,a value chain can span two or more countries.

Question 17

Foreign direct investment is the limited,speculative purchase of stocks and bonds in a foreign company by individuals.

Question 18

Sometimes those using the name multinational mean to imply that these companies have erased national allegiances,becoming itinerant firms that move investment and activity from nation to nation in search of profits.

Question 19

Though TNCs differ greatly in international dimensions,a single measure has been created that can capture the definitive meaning of "transnational."

Question 20

The typical MNC is international rather than national.

Question 21

Which of the following is a part of the tiers of internationalization?

A) Export sales
B) Indirect investments
C) Importing essential goods
D) Portfolio investment

Question 22

Most multinational corporations (MNCs)are:

A) public enterprises.
B) state-owned.
C) cooperatives.
D) private enterprises.

Question 23

When multinational corporations invest their funds to start a business in a foreign country,this is called a(n):

A) FDI.
B) TPI.
C) LDC.
D) TNI.

Question 24

The United Nations defines transnational corporations (TNCs)as:

A) doing business in the state in which they are incorporated.
B) doing business in the state of incorporation as well as neighboring states in the same country.
C) companies that have erased national allegiances and become itinerant firms that move investment and activity from nation to nation in search of profits.
D) parent firms that control the assets of affiliated entities in foreign countries including branches,subsidiaries,and joint ventures.

Question 25

Transnational corporations are defined as:

A) doing business in the state in which they are incorporated.
B) doing business in the state of incorporation as well as neighboring states in the same country.
C) parent entities that control assets of affiliated entities in foreign countries.
D) entities formed between two or more parties only to import essential goods.

Question 26

The five tiers of internationalization in MNCs:

A) state a common method to enter foreign market in five stages.
B) represent alternate ways to extend business activity into foreign markets.
C) explain a common method to enter the domestic market in stages.
D) represent ways to expand business in the domestic market.

Question 27

All of the following ratios are used to compute the TNI EXCEPT:

A) foreign employment to total employment.
B) foreign assets to total assets.
C) foreign sales to total sales.
D) foreign assets to total unemployment.

Question 28

Identify the tier that is a part of internationalization.

A) Indirect investments
B) Importing essential goods
C) Licensing franchises
D) Portfolio investment

Question 29

Which of the following is a less preferred name,compared to the others,for a multinational corporation?

A) Global
B) Multidomestic
C) Transnational
D) International

Question 30

The most widely used index measure of a corporation's "multinationality" is called the:

A) LDC.
B) TNI.
C) FDI.
D) TNC.

Question 31

With regard to MNCs in the United States:

A) it is still rare for top executives to be naturalized citizens.
B) boards of directors are dominated by foreign country majorities.
C) most employees at company headquarters are foreign country nationals.
D) each company must be chartered by a state.

Question 32

All of the following are a part of global production EXCEPT:

A) research.
B) distribution.
C) logistics.
D) portfolio investment.

Question 33

An entity headquartered in one country that does business in one or more foreign countries is called a(n):

A) MNC.
B) LDC.
C) TNI.
D) FDI.

Question 34

The economic policy of lowering tariffs and other barriers to encourage trade and investment is known as:

A) liberalization.
B) globalization.
C) capitalism.
D) multinationality.

Question 35

Direct investment means:

A) buying or creating facilities in another country for producing in local markets.
B) buying or creating facilities in home country.
C) buying facilities based in home country for the purpose of exporting products.
D) buying facilities in home country for the sole purpose of importing essential goods.

Question 36

Which Act makes it illegal for U.S.citizens anywhere in the world to bribe foreign officials?

A) The International Anti-Bribery Act
B) The Foreign Corrupt Practices Act
C) The Sarbanes-Oxley Act
D) The Foreign Investment and National Security Act

Question 37

Which of the following is true about typical MNCs?

A) Most MNCs are said to be stateless.
B) Corporations are formed under international incorporation laws.
C) They remain national rather than international.
D) MNCs have become too transnational.

Question 38

This is a part of the tiers of internationalization.

A) Indirect investments
B) Establishment of foreign sales offices
C) Portfolio investment
D) Importing essential goods

Question 39

Each of the five tiers of internationalization is seen as all of the following EXCEPT:

A) a theory.
B) an ideal.
C) a model.
D) a policy.

Question 40

Business entities in foreign countries controlled by parent transnational corporations are known as:

A) foreign affiliates.
B) indigenous producers.
C) domestically owned firms.
D) parent firms.

Question 41

According to leading progressive,DavidC.Korten:

A) power on earth was being transferred from national governments to transnational corporations which by their nature serve only the short-term interests of citizens.
B) "a few hundred" multinational corporations are making daily business decisions which have more impact than those of most sovereign governments.
C) developing nations should set up a stable and enabling regulatory environment that indulges the "concern of the business sector for national policies that are enabling but not overly regulating."
D) in seeking return on capital invested,MNCs may build or buy facilities,contract with local suppliers,and hire workers.

Question 42

Almost all FDI comes from:

A) hedge funds.
B) sovereign wealth funds.
C) multinational corporations.
D) private equity.

Question 43

This is measured as the dollar value of funds invested by a parent corporation for starting,acquiring,or expanding an enterprise in a foreign nation.

A) Portfolio investment
B) FDI
C) Debt security
D) TNI

Question 44

The treaty that requires nations to preserve biological diversity by promoting sustainable economic activity is known as the:

A) Convention on Biological Diversity.
B) 2010 Biodiversity Target.
C) Global Biodiversity Information Facility.
D) Pacific Biodiversity Information Forum.

Question 45

Principle 9 of the Global Compact Principles urges a precautionary approach to environmental risks,a philosophy rising from the _____ and accepted by regulators in Europe,but less so in the United States.

A) Earth Summit
B) Convention on Biological Diversity
C) Earth Charter
D) Rio Declaration

Question 46

The single most conspicuous effort to promote MNC social responsibility and to harness FDI for economic development is the:

A) social contract.
B) Universal Declaration of Human Rights.
C) Global Compact.
D) transnationality index.

Question 47

The Global Compact:

A) is a code of conduct.
B) enforces its principles.
C) advances its principles as an "aspirational" set of "shared values."
D) requires mandatory participation.

Question 48

Which of the following is a negative economic effect of FDI?

A) Governments protect politically powerful industries with characteristic control.
B) MNCs in manufacturing are accused of exploiting factory workers.
C) Although competition from a new foreign affiliate can stimulate local firms,the new entry can also overwhelm them.
D) Multinational corporations are criticized for repatriating profits to host countries,so that local residents get limited benefit from their presence.

Question 49

Which of the following is true about the OECD Guidelines?

A) An informal process exists to "encourage" observance of the guidelines.
B) Each government that joins in the guidelines sets up an office,called a "national contact point."
C) Observance of the guidelines is obligatory.
D) There are legal sanctions and penalties for violations of the guidelines.

Question 50

Which of the following statements about portfolio investments is true?

A) It is measured as the dollar value of funds invested by a parent corporation.
B) It is limited and speculative.
C) It confers a degree of control over the company.
D) It is a long-term investment that cannot be sold anytime.

Question 51

Which of the following is NOT a general policy of the OECD Guidelines for Multinational Enterprises?

A) Enterprises should encourage human capital formation,in particular by creating employment opportunities and facilitating training opportunities for employees.
B) Enterprises should take disciplinary action against employees who make bona fide reports to management.
C) Enterprises should refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to environmental,taxation,or other issues.
D) Enterprises should respect the human rights of those affected by their activities consistent with the host government's international obligations and commitments.

Question 52

The OECD Guidelines for Multinational Enterprises:

A) are a set of 16 broadly worded principles about protecting and conserving the natural environment.
B) reinforces capitalism by making it moral.
C) are global guidelines for socially responsible and ethical behavior based on ethical ideas in the great religions.
D) is the only comprehensive global code of corporate conduct endorsed by governments.

Question 53

Which of the following is NOT one of the three most common reasons for corporations to make foreign direct investments?

A) They seek access to new markets.
B) They seek to introduce new management skills and technologies to foreign markets.
C) Companies in nations with small domestic markets enter foreign markets to grow.
D) Some companies create efficiencies and lower their costs by moving production across borders.

Question 54

This is a 1977 code of conduct that required multinational corporations in South Africa to do business in a nondiscriminatory way.

A) The MacBride Principles
B) The Equator Principles
C) The CERES Principles
D) The Sullivan Principles

Question 55

This is the financial process by which a corporation takes partial or total control of foreign assets with the intention of having a long-term presence.

A) TPI
B) Indirect investment
C) Portfolio investment
D) FDI

Question 56

A(n)_____ is a government entity that invests the savings of a nation.

A) angel investor
B) private investor
C) central bank
D) sovereign wealth fund

Question 57

This is the limited,speculative purchase of stocks and bonds of a foreign company by individuals or mutual funds.

A) Portfolio investment
B) FDI
C) TNI
D) Direct investment

Question 58

The main purpose of this code is to boost economic growth of its members by expanding trade.

A) The OECD Guidelines for Multinational Enterprises
B) The Caux Round Table principles for business
C) The Business Charter for Sustainable Development
D) The FLA Workplace Code of Conduct

Question 59

All of the following statements are true of FDI EXCEPT:

A) it is the financial process by which a corporation takes partial or total control of foreign assets.
B) it is measured as the dollar value of funds invested by a parent corporation.
C) it is a short-term investment that can be sold anytime.
D) it is almost always made by transnational corporations.

Question 60

These are aspirational statements of principles,policies,and rules for foreign operations that a multinational corporation voluntarily agrees to follow.

A) Industrial codes of conduct
B) Professional codes of conduct
C) International codes of conduct
D) Corporate codes of conduct

Question 61

Business groups say that the Alien Tort Claims Act:

A) brings justice for the oppressed.
B) victimizes the world's poor "by imposing an enormous tax on investment in developing countries at a time the world desperately needs such investment."
C) will restrict U.S.officials from going to different corners of the globe and exploiting the local populations.
D) gives "people in foreign countries comfort that U.S.corporations will abide by international standards."

Question 62

What is portfolio investment? How is it different from FDI?

Question 63

Briefly explain international codes of conduct with reference to the Sullivan Principles.

Question 64

Why were the strategic advantages of the fourth-tier model less compelling for American manufacturers?

Question 65

That businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining comes under which Global Compact principle?

A) Anti-corruption
B) Human rights
C) The environment
D) Labor standards

Question 66

Discuss the OECD Guidelines for Multinational Enterprises.

Question 67

Discuss the relevance of the Alien Tort Claims Act.

Question 68

What was the original intent of the 1789 Alien Tort Claims Act?

A) To make it illegal for U.S.citizens anywhere in the world to bribe foreign officials.
B) To set criminal penalties in abetting the overthrow of the U.S.government.
C) To protect the United States from enemy aliens.
D) To protect the rights of ambassadors and to try pirates.

Question 69

What are the three most common reasons for corporations to make foreign direct investments?

Question 70

Explain what is meant by foreign direct investment.

Question 71

Give two examples of actions reported by Global Compact participants.

Question 72

List the five tiers of internationalization.

Question 73

Discuss the negative economic and social effects of FDI.

Question 74

Explain the three ratios that are used to compute a TNI index for a multinational company.

Question 75

What is the Rio Declaration?

Question 76

This is the act of a corporation cloaking its lack of social responsibility by insincere membership in the UN Global Compact.

A) Apartheid
B) Bluewashing
C) Snowballing
D) Astroturfing

Question 77

Discuss the United Nation's efforts to promote MNC social responsibility and to harness FDI for economic development.

Question 78

What is soft law?

Question 79

This is a 1789 law permitting foreign citizens to litigate alleged violations of international law in U.S.federal district courts.

A) The Alien Tort Claims Act
B) The Sherman Antitrust Act
C) The Foreign Exchange Regulation Act
D) The Sarbanes-Oxley Act

Question 80

Define bluewashing.