Question 1

The benefits of a strategic control process in a MNE include

Accepted Answer

A)  more stretching of performance standards 
B)  greater realism in planning 
C)  more motivation for business unit managers 
D)  all of the above. 
A)  more stretching of performance standards 
B)  greater realism in planning 
C)  more motivation for business unit managers 
D)  all of the above. D

Question 2

Which of the following Lessard/Lorange translation approaches results in a foreign exchange variance?

Accepted Answer

A)  A-1 
B)  P-2 
C)  P-3 
D)  E-3 
A)  A-1 
B)  P-2 
C)  P-3 
D)  E-3 C

Question 3

A performance evaluation tool that connects financial performance with non-financial drivers is

Accepted Answer

A)  return on investment. 
B)  balanced scorecard. 
C)  economic value added. 
D)  residual income 
A)  return on investment. 
B)  balanced scorecard. 
C)  economic value added. 
D)  residual income B

Question 4

Lessard and Lorange's study suggests that managers of foreign subsidiaries should be held accountable for foreign exchange affects.

Accepted Answer

A) True 
 B)False

Question 5

A strategic control process in a MNE

Accepted Answer

A)  involves a one-directional flow of products, capital and knowledge. 
B)  should be formal but not necessarily rigid. 
C)  will not work if the firm cannot get good data on global competitors. 
D)  all of the above. 
A)  involves a one-directional flow of products, capital and knowledge. 
B)  should be formal but not necessarily rigid. 
C)  will not work if the firm cannot get good data on global competitors. 
D)  all of the above.

Question 6

Benchmarking performance based on global competitors is sound practice, because since it is easy to get good data on them.

Accepted Answer

A) True 
 B)False

Question 7

In order to maximize global profits, foreign subsidiaries should always be established as profit centers.

Accepted Answer

A) True 
 B)False

Question 8

A major advantage of offshore production is that

Accepted Answer

A)  labor is higher offshore. 
B)  the overall cost structure in a low-wage country is lower. 
C)  companies can get better quality offshore than they can in their domestic market. 
D)  foreign exchange risk can be eliminated. 
A)  labor is higher offshore. 
B)  the overall cost structure in a low-wage country is lower. 
C)  companies can get better quality offshore than they can in their domestic market. 
D)  foreign exchange risk can be eliminated.

Question 9

There have been few good studies on the use of local currency versus parent currency in establishing budgets. However, the Appleyard study of a small sample of British firms found that

Accepted Answer

A)  most firms set their budgets in local currency. 
B)  most firms set their budgets in sterling. 
C)  most firms set their budgets in both sterling and the local currency. 
D)  most firms set their budgets in the local currency, although all of them saw the final results in sterling. 
A)  most firms set their budgets in local currency. 
B)  most firms set their budgets in sterling. 
C)  most firms set their budgets in both sterling and the local currency. 
D)  most firms set their budgets in the local currency, although all of them saw the final results in sterling.

Question 10

Bailes and Assada report differences between performance measurement by Japanese and American companies

Accepted Answer

A)  Japanese most frequently use sales and Americans most frequently use return on investment 
B)  Japanese most frequently use return on investment and Americans most frequently use sales 
C)  Japanese most frequently use asset turnover and Americans most frequently use profit minus corporate costs 
D)  Japanese most frequently use market share and Americans most frequently use profit minus corporate costs 
A)  Japanese most frequently use sales and Americans most frequently use return on investment 
B)  Japanese most frequently use return on investment and Americans most frequently use sales 
C)  Japanese most frequently use asset turnover and Americans most frequently use profit minus corporate costs 
D)  Japanese most frequently use market share and Americans most frequently use profit minus corporate costs

Question 11

Market-driven standards are more appropriate for products

Accepted Answer

A)  that are in the star and cash cow phases of the product cycle. 
B)  in a mature, commodity business. 
C)  manufactured in Japan but not Europe. 
D)  in a firm following a product differentiation strategy in a fast-growing, fast-changing business. 
A)  that are in the star and cash cow phases of the product cycle. 
B)  in a mature, commodity business. 
C)  manufactured in Japan but not Europe. 
D)  in a firm following a product differentiation strategy in a fast-growing, fast-changing business.

Question 12

Which of the following Lessard/Lorange translation approaches forces management to predict the future?

Accepted Answer

A)  setting the budget and tracking performance at the actual rate at the time of the budget. 
B)  setting the budget at the actual rate at the time of the budget and tracking performance at the actual rate at the end of the period. 
C)  setting the budget at the projected rate and tracking performance at the rate at the end of the period. 
D)  updating the budget for the end of period rate and tracking performance at the end of period rate. 
A)  setting the budget and tracking performance at the actual rate at the time of the budget. 
B)  setting the budget at the actual rate at the time of the budget and tracking performance at the actual rate at the end of the period. 
C)  setting the budget at the projected rate and tracking performance at the rate at the end of the period. 
D)  updating the budget for the end of period rate and tracking performance at the end of period rate.

Question 13

Implementors need much more autonomy than do global innovators.

Accepted Answer

A) True 
 B)False

Question 14

Return on investment is a popular performance evaluation technique of MNEs, because

Accepted Answer

A)  it takes into consideration transfer pricing policies. 
B)  it allows the parent company to compare operations more easily. 
C)  it is an accurate indicator of currency differences. 
D)  it allows the MNEs to focus on market share. 
A)  it takes into consideration transfer pricing policies. 
B)  it allows the parent company to compare operations more easily. 
C)  it is an accurate indicator of currency differences. 
D)  it allows the MNEs to focus on market share.

Question 15

Which of the following does not accurately describe economic value added.

Accepted Answer

A)  It is after-tax operating profit minus the total annual cost of capital. 
B)  It includes the cost of debt and the cost of equity. 
C)  It is a measure of the value added or depleted from shareholder value in one period. 
D)  It requires that different costs of capital be used in different country settings. 
A)  It is after-tax operating profit minus the total annual cost of capital. 
B)  It includes the cost of debt and the cost of equity. 
C)  It is a measure of the value added or depleted from shareholder value in one period. 
D)  It requires that different costs of capital be used in different country settings.

Question 16

For Japanese MNEs, sales is the most often used measure of performance.

Accepted Answer

A) True 
 B)False

Question 17

Foreign subsidiaries have a better understanding of financial performance with
I..financial statements in the home headquarter's currency
II..financial statement in the local currency

Accepted Answer

A)  I 
B)  II 
C)  either I or II 
D)  I and II 
A)  I 
B)  II 
C)  either I or II 
D)  I and II

Question 18

Because of the reliance on budgets, American managers reduce "slack" in budgets.

Accepted Answer

A) True 
 B)False

Question 19

A challenge for the strategic control process is

Accepted Answer

A)  clarity in planning 
B)  the process gets big and bureacratized 
C)  nonfinancial measures 
D)  annual operating plans 
A)  clarity in planning 
B)  the process gets big and bureacratized 
C)  nonfinancial measures 
D)  annual operating plans

Question 20

According to the Abdallah and Keller study on performance evaluation systems of MNEs,

Accepted Answer

A)  budgets were equally important as a measure of foreign subsidiary and foreign subsidiary management performance. 
B)  ROI is no longer an important technique of evaluating performance. 
C)  Companies tend to evaluate foreign subsidiary performance but not performance of foreign management. 
D)  foreign currency is not a critical element in performance evaluation of MNEs due to widespread use of the current rate method. 
A)  budgets were equally important as a measure of foreign subsidiary and foreign subsidiary management performance. 
B)  ROI is no longer an important technique of evaluating performance. 
C)  Companies tend to evaluate foreign subsidiary performance but not performance of foreign management. 
D)  foreign currency is not a critical element in performance evaluation of MNEs due to widespread use of the current rate method.

The benefits of a strategic control process in a MNE include

Which of the following Lessard/Lorange translation approaches results in a foreign exchange variance?

A performance evaluation tool that connects financial performance with non-financial drivers is

Lessard and Lorange's study suggests that managers of foreign subsidiaries should be held accountable for foreign exchange affects.

A strategic control process in a MNE

Benchmarking performance based on global competitors is sound practice, because since it is easy to get good data on them.

In order to maximize global profits, foreign subsidiaries should always be established as profit centers.

A major advantage of offshore production is that

There have been few good studies on the use of local currency versus parent currency in establishing budgets. However, the Appleyard study of a small sample of British firms found that

Bailes and Assada report differences between performance measurement by Japanese and American companies

Market-driven standards are more appropriate for products

Which of the following Lessard/Lorange translation approaches forces management to predict the future?

Implementors need much more autonomy than do global innovators.

Return on investment is a popular performance evaluation technique of MNEs, because

Which of the following does not accurately describe economic value added.

For Japanese MNEs, sales is the most often used measure of performance.

Foreign subsidiaries have a better understanding of financial performance with I..financial statements in the home headquarter's currency II..financial statement in the local currency

Because of the reliance on budgets, American managers reduce "slack" in budgets.

A challenge for the strategic control process is

According to the Abdallah and Keller study on performance evaluation systems of MNEs,

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Auditing Issues

International Taxation Issues

Filters

Exam 14: International Budgeting and Performance Evaluation

The benefits of a strategic control process in a MNE include

Which of the following Lessard/Lorange translation approaches results in a foreign exchange variance?

A performance evaluation tool that connects financial performance with non-financial drivers is

Lessard and Lorange's study suggests that managers of foreign subsidiaries should be held accountable for foreign exchange affects.

A strategic control process in a MNE

Benchmarking performance based on global competitors is sound practice, because since it is easy to get good data on them.

In order to maximize global profits, foreign subsidiaries should always be established as profit centers.

A major advantage of offshore production is that

There have been few good studies on the use of local currency versus parent currency in establishing budgets. However, the Appleyard study of a small sample of British firms found that

Bailes and Assada report differences between performance measurement by Japanese and American companies

Market-driven standards are more appropriate for products

Which of the following Lessard/Lorange translation approaches forces management to predict the future?

Implementors need much more autonomy than do global innovators.

Return on investment is a popular performance evaluation technique of MNEs, because

Which of the following does not accurately describe economic value added.

For Japanese MNEs, sales is the most often used measure of performance.

Foreign subsidiaries have a better understanding of financial performance with I..financial statements in the home headquarter's currency II..financial statement in the local currency

Because of the reliance on budgets, American managers reduce "slack" in budgets.

A challenge for the strategic control process is

According to the Abdallah and Keller study on performance evaluation systems of MNEs,

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Auditing Issues

International Taxation Issues

Filters