Question 1

Which of the following is NOT considered to be a type of competitive advantage that may be enjoyed by an MNE?
A) competitiveness in their home markets
B) foreign exchange risks
C) economies of scale
D) economies of scope

Accepted Answer

Foreign exchange risks are not a type of competitive advantage but rather a potential risk that MNEs need to manage. Competitiveness in their home markets, economies of scale, and economies of scope are examples of competitive advantages that allow MNEs to compete more effectively.

Question 2

A well-established, large firm U.S.-based MNE will probably not be able to overcome which of the following obstacles to maximizing firm value?
A) an open market place
B) high quality strategic management
C) access to capital
D) none of the above

Accepted Answer

A well-established, large firm U.S.-based MNE is likely to have access to capital and high-quality strategic management. Additionally, an open marketplace can provide opportunities for growth and expansion. Therefore, there are no major obstacles for such a firm to maximize value.

Question 3

Which of the following are critical to a firm trying to reach the top of the "firm value pyramid"?
A) an open market place
B) high quality strategic management
C) access to capital
D) all of the above

Accepted Answer

A

Question 4

The theory that suggests specialization by country can increase worldwide production is ________.
A) the theory of comparative advantage
B) the theory of foreign direct investment
C) the international Fisher effect
D) the theory of working capital management

Accepted Answer

The theory of comparative advantage suggests that if countries specialize in producing goods and services that they have a comparative advantage in, it can increase worldwide production and efficiency. This theory was developed by economist David Ricardo.

Question 5

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?
A) evaluation of the credit quality of foreign buyers and sellers
B) foreign consumer method of payment preferences
C) credit risk management
D) evaluation of foreign exchange risk

Accepted Answer

Although the authors mentioned that financial management services need to account for changes in foreign currency, credit risk, and evaluating credit quality of foreign entities, they did not explicitly mention foreign consumer payment preferences as a specific demand of financial management services due to globalization.

Question 6

Comparative advantage was once the cornerstone of international trade theory, but today it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs.

Accepted Answer

Comparative advantage is still a fundamental concept in international trade and investment theory, and is regularly used to explain the allocation of resources and production decisions made by MNEs. While it may have limitations and criticisms, it remains a useful tool for understanding the benefits of trade and specialization.

Question 7

Three necessary conditions for a firm to reach the top of the "firm value pyramid" are an open market place, high quality strategic management, and access to capital.

Accepted Answer

These are the necessary conditions for a firm to reach the top of the "firm value pyramid." An open market place provides opportunities for growth and competition, high quality strategic management allows for effective decision making and execution of plans, and access to capital allows for investment and expansion.

Question 8

The authors describe the multinational phase of globalization for a firm as one characterized by the
A) ownership of assets and enterprises in foreign countries.
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.
C) imports from foreign suppliers and exports to foreign buyers.
D) requirement that all employees be multilingual.

Accepted Answer

The multinational phase of globalization for a firm is characterized by the ownership of assets and enterprises in foreign countries, which is option A. The other options do not accurately define the multinational phase of globalization.

Question 9

Which of the following would NOT be a way to implement comparative advantage?
A) IBM exports computers to Egypt.
B) Computer hardware is designed in the United States but manufactured and assembled in Korea.
C) Water of the greatest purity is obtained from wells in Oregon, bottled, and exported worldwide.
D) All of the above are examples of ways to implement comparative advantage.

Accepted Answer

All of the given examples involve countries or firms specializing in producing goods that they have a comparative advantage in and trading it with other countries for goods they do not have a comparative advantage in. Therefore, all of them are examples of implementing comparative advantage.

Question 10

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

Accepted Answer

As countries develop, they may discover and invest in new industries or resources that give them a comparative advantage. Additionally, changes in technology or trade policies can also shift a country's comparative advantage over time. Therefore, comparative advantage is not necessarily fixed and can change as countries develop and adapt.

Question 11

________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors.
A) Conservative; aggressive
B) Defensive; proactive
C) Proactive; defensive
D) Aggressive; proactive

Accepted Answer

The answer of ________ investments are designed to promote and...

Question 12

Which of the following is NOT considered to be a type of competitive advantage that may be enjoyed by an MNE?
A) managerial and marketing expertise
B) superior technology due to investment in research and development
C) increased agency costs
D) differentiated products

Accepted Answer

Increased agency costs are not a type of competitive advantage, but rather a potential cost or challenge to MNEs. The other options are all potential sources of competitive advantage that could give an MNE an edge over its competitors.

Question 13

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?
A) evaluation of the credit quality of foreign buyers and sellers
B) foreign consumer method of payment preferences
C) credit risk management
D) evaluation of foreign exchange risk

Accepted Answer

While it is true that foreign consumer method of payment preferences may need to be taken into consideration by firms conducting global business, the authors did not mention it as an increase in the demands of financial management services due to increased globalization. The other options (evaluation of the credit quality of foreign buyers and sellers, credit risk management, evaluation of foreign exchange risk) were all specifically mentioned as increased demands.

Question 14

A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool

Accepted Answer

A well-established, large China-based MNE may face challenges in an open marketplace, where they will face more competition from local and international firms. This may impact the firm's ability to maintain their market share and profitability, as they will need to compete on pricing and quality with other firms in the market. Additionally, an open market may also expose the firm to increased regulatory scrutiny and legal challenges, making it more difficult for them to operate effectively. Therefore, an open marketplace would be the most adversely affected element of firm value for a large China-based MNE.

Question 15

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the
A) domestic phase.
B) multinational phase.
C) international trade phase.
D) import-export banking phase.

Accepted Answer

The phase described in the question is commonly referred to as the international trade phase. It involves a focus on buying goods or services from foreign suppliers and selling them to foreign buyers. This differs from the multinational phase, which typically involves establishing a physical presence in foreign markets through investments or acquisitions. The other two options, domestic phase and import-export banking phase, are not accurate descriptions of this particular phase of globalization.

Question 16

Of the following, which would NOT be considered a way that government interferes with comparative advantage?
A) tariffs
B) managerial skills
C) quotas
D) other non-tariff restrictions

Accepted Answer

Managerial skills are not a way that government interferes with comparative advantage. Managerial skills are a factor of production and fall under the umbrella of technological factors that determine a country's ability to produce goods and services efficiently. Tariffs, quotas, and other non-tariff restrictions are all ways that governments can interfere with comparative advantage by creating barriers to trade and reducing the ability of countries to specialize in the production of goods and services where they have a comparative advantage.

Question 17

The authors describe the multinational phase of globalization for a firm as one characterized by the
A) ownership of assets and enterprises in foreign countries.
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.
C) imports from foreign suppliers and exports to foreign buyers.
D) requirement that all employees be multilingual.

Accepted Answer

The multinational phase of globalization for a firm is characterized by the ownership of assets and enterprises in foreign countries, as stated in option A. This implies that the company has expanded its operations beyond its domestic market and has established a significant presence in other countries. Options B, C, and D do not fully capture the essence of the multinational phase of globalization as described in the text.

Question 18

Which of the following would NOT be considered a feature of comparative advantage?
A) Exporters in Country A sell goods or services to unrelated importers in Country B.
B) Firms in Country A specialize in making products that can be produced relatively efficiently, given County A's endowment of factors of production. Firms in Country B do likewise thus maximizing the combined output of Countries A and B.
C) Trade exists between Counties A and B because of specialized factors of production that cannot be moved among countries.
D) All of the above are features of comparative advantage.

Accepted Answer

All of the given options are features of comparative advantage. Option A describes the trade aspect of comparative advantage, Option B describes the specialization of factors of production, and Option C highlights the immobility of factors of production as the reason for trade to occur. Thus, all of the options are correct.

Question 19

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market seeking firms produce in foreign countries?
A) satisfaction of local demand in the foreign country
B) satisfaction of local demand in the domestic markets
C) political safely and small likelihood of government expropriation of assets
D) All of the above are market-seeking activities.

Accepted Answer

Market-seeking firms produce in foreign countries primarily to satisfy local demand in those markets, not for political safety or to avoid expropriation.

Question 20

A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool

Accepted Answer

The answer of A well-established, large, Brazil-based MNE will probably...

Quiz 1: Globalization and the Multinational Enterprise

Which of the following is NOT considered to be a type of competitive advantage that may be enjoyed by an MNE?

A well-established, large firm U.S.-based MNE will probably not be able to overcome which of the following obstacles to maximizing firm value?

Which of the following are critical to a firm trying to reach the top of the "firm value pyramid"?

The theory that suggests specialization by country can increase worldwide production is ________.

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Comparative advantage was once the cornerstone of international trade theory, but today it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs.

Three necessary conditions for a firm to reach the top of the "firm value pyramid" are an open market place, high quality strategic management, and access to capital.

The authors describe the multinational phase of globalization for a firm as one characterized by the

Which of the following would NOT be a way to implement comparative advantage?

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

investments are designed to promote and enhance the growth and profitability of the firm. investments are designed to deny those same opportunities to the firm's competitors.

Which of the following is NOT considered to be a type of competitive advantage that may be enjoyed by an MNE?

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

The authors describe the multinational phase of globalization for a firm as one characterized by the

Which of the following would NOT be considered a feature of comparative advantage?

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market seeking firms produce in foreign countries?

A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?