Question 1

Which of the following is NOT a potential disadvantage of licensing relative to FDI?

Accepted Answer

A)  possible loss of quality control 
B)  establishment of a potential competitor in third-country markets 
C)  possible improvement of the technology by the local licensee, which then enters the original firm's home market 
D)  All of the above are potential disadvantages to licensing. 
A)  possible loss of quality control 
B)  establishment of a potential competitor in third-country markets 
C)  possible improvement of the technology by the local licensee, which then enters the original firm's home market 
D)  All of the above are potential disadvantages to licensing.

Question 2

Reactive financial strategies can be formulated in advance by the MNE's financial managers.

Accepted Answer

A) True 
 B)False

Question 3

What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?

Accepted Answer

A greenfield investment is defined as es

Question 4

What is meant by the term "governance risk"? What is the most important type of governance risk?

Accepted Answer

Governance risk is the ability to exerci

Question 5

What are the main types of political risks that are global in origin? What are the main strategies used by MNEs to manage the globalspecific risks you have identified?

Accepted Answer

Terrorism and war,anti-globali

Question 6

The L in OLI refers to an advantage in a firm's home market that is a:

Accepted Answer

A)  liability in the domestic market. 
B)  location-specific advantage. 
C)  longevity in a particular market. 
D)  none of the above 
A)  liability in the domestic market. 
B)  location-specific advantage. 
C)  longevity in a particular market. 
D)  none of the above

Question 7

Terrorism,cyber attacks,and the anti-globalization movement are each examples of ________ risks.

Accepted Answer

A)  firm-specific 
B)  country-specific 
C)  institutional 
D)  global-specific 
A)  firm-specific 
B)  country-specific 
C)  institutional 
D)  global-specific

Question 8

The I in OLI refers to an advantage in a firm's home market that is an:

Accepted Answer

A)  internalization. 
B)  industry-specific advantage. 
C)  international abnormality. 
D)  none of the above 
A)  internalization. 
B)  industry-specific advantage. 
C)  international abnormality. 
D)  none of the above

Question 9

Business risk can be measured through sensitivity analysis but from only the project viewpoint.

Accepted Answer

A) True 
 B)False

Question 10

Joint ventures are a more common FDI than wholly owned subsidiaries.

Accepted Answer

A) True 
 B)False

Question 11

Based on observations of firms that have successfully invested abroad,we can conclude companies are more competitive when:

Accepted Answer

A)  facing sophisticated and demanding customers in the home market. 
B)  surrounded by a critical mass of related industries and suppliers. 
C)  located in countries that are naturally endowed with the appropriate factors of production. 
D)  all of the above are true 
A)  facing sophisticated and demanding customers in the home market. 
B)  surrounded by a critical mass of related industries and suppliers. 
C)  located in countries that are naturally endowed with the appropriate factors of production. 
D)  all of the above are true

Question 12

Proactive financial strategies depend on discovering market imperfections.

Accepted Answer

A) True 
 B)False

Question 13

An alternative strategy to engaging in bribery in international investments include:

Accepted Answer

A)  refuse bribery outright. 
B)  retain local advisors to diffuse requests for bribes. 
C)  educate management and local employees about the firm's bribery policy. 
D)  all of the above 
A)  refuse bribery outright. 
B)  retain local advisors to diffuse requests for bribes. 
C)  educate management and local employees about the firm's bribery policy. 
D)  all of the above

Question 14

Which of the following is NOT one of classic trade-off confronting gloabl challengers according to the Boston Consulting Group?

Accepted Answer

A)  Growth versus market share 
B)  Volume versus margin 
C)  Rapid expansion versus low leverage 
D)  Growth versus dividends 
A)  Growth versus market share 
B)  Volume versus margin 
C)  Rapid expansion versus low leverage 
D)  Growth versus dividends

Question 15

________ is NOT one of the three main country-specific risks as outlined by your authors.

Accepted Answer

A)  Transfer risk 
B)  Cultural differences 
C)  Thin equity base 
D)  Protectionism 
A)  Transfer risk 
B)  Cultural differences 
C)  Thin equity base 
D)  Protectionism

Question 16

Which of the following could be considered an example of forced reinvestment if the blockage of funds was expected to be temporary?

Accepted Answer

A)  vertical reinvestment by an automobile manufacturer to buy parts suppliers and showrooms 
B)  a lumber cutting company subsequently builds a paper mill with blocked funds 
C)  purchase of local money market instruments and short-term loans 
D)  all of the above 
A)  vertical reinvestment by an automobile manufacturer to buy parts suppliers and showrooms 
B)  a lumber cutting company subsequently builds a paper mill with blocked funds 
C)  purchase of local money market instruments and short-term loans 
D)  all of the above

Question 17

Of the following,which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

Accepted Answer

A)  differences in human resource norms 
B)  differences in religious heritage 
C)  differences in allowable ownership structures 
D)  All of the above must be considered. 
A)  differences in human resource norms 
B)  differences in religious heritage 
C)  differences in allowable ownership structures 
D)  All of the above must be considered.

Question 18

As a result of the terrorist attacks of September 11,2001,many firms have employed a wide range of tactics to ensure continued flow of inventory in the face of government steps to curb terrorism.Which of the following is an inventory sourcing strategy response (as opposed to an inventory management response,or a transportation response)?

Accepted Answer

A)  carrying more inventory on-hand 
B)  minimizing cross-border exposure from suppliers 
C)  shifting to air cargo shipments instead of co-habitation of products and passengers on commercial air flights 
D)  increasing the on-hand supply of critical parts 
A)  carrying more inventory on-hand 
B)  minimizing cross-border exposure from suppliers 
C)  shifting to air cargo shipments instead of co-habitation of products and passengers on commercial air flights 
D)  increasing the on-hand supply of critical parts

Question 19

The OLI paradigm is an attempt to create a framework to explain why MNEs choose ________ rather than some other form of international venture.

Accepted Answer

A)  licensing 
B)  joint ventures 
C)  foreign direct investment 
D)  strategic alliances 
A)  licensing 
B)  joint ventures 
C)  foreign direct investment 
D)  strategic alliances

Which of the following is NOT a potential disadvantage of licensing relative to FDI?

Reactive financial strategies can be formulated in advance by the MNE's financial managers.

What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?

What is meant by the term "governance risk"? What is the most important type of governance risk?

What are the main types of political risks that are global in origin? What are the main strategies used by MNEs to manage the globalspecific risks you have identified?

The L in OLI refers to an advantage in a firm's home market that is a:

Terrorism,cyber attacks,and the anti-globalization movement are each examples of ________ risks.

The I in OLI refers to an advantage in a firm's home market that is an:

Business risk can be measured through sensitivity analysis but from only the project viewpoint.

Joint ventures are a more common FDI than wholly owned subsidiaries.

Based on observations of firms that have successfully invested abroad,we can conclude companies are more competitive when:

Proactive financial strategies depend on discovering market imperfections.

An alternative strategy to engaging in bribery in international investments include:

Which of the following is NOT one of classic trade-off confronting gloabl challengers according to the Boston Consulting Group?

________ is NOT one of the three main country-specific risks as outlined by your authors.

Which of the following could be considered an example of forced reinvestment if the blockage of funds was expected to be temporary?

Of the following,which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

The OLI paradigm is an attempt to create a framework to explain why MNEs choose ________ rather than some other form of international venture.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 17: Foreign Direct Investment and Political Risk

Which of the following is NOT a potential disadvantage of licensing relative to FDI?

Reactive financial strategies can be formulated in advance by the MNE's financial managers.

What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?

What is meant by the term "governance risk"? What is the most important type of governance risk?

What are the main types of political risks that are global in origin? What are the main strategies used by MNEs to manage the globalspecific risks you have identified?

The L in OLI refers to an advantage in a firm's home market that is a:

Terrorism,cyber attacks,and the anti-globalization movement are each examples of ________ risks.

The I in OLI refers to an advantage in a firm's home market that is an:

Business risk can be measured through sensitivity analysis but from only the project viewpoint.

Joint ventures are a more common FDI than wholly owned subsidiaries.

Based on observations of firms that have successfully invested abroad,we can conclude companies are more competitive when:

Proactive financial strategies depend on discovering market imperfections.

An alternative strategy to engaging in bribery in international investments include:

Which of the following is NOT one of classic trade-off confronting gloabl challengers according to the Boston Consulting Group?

________ is NOT one of the three main country-specific risks as outlined by your authors.

Which of the following could be considered an example of forced reinvestment if the blockage of funds was expected to be temporary?

Of the following,which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

The OLI paradigm is an attempt to create a framework to explain why MNEs choose ________ rather than some other form of international venture.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters