1. The most commonly accepted goal of the MNC is: a. to maximize revenues b. to maximize shareholder wealth c. to maximize profitability of the firm d. both a and b
2. Agency costs are normally larger for MNCs than for purely domestic firms. Which of the following is not a reason for this larger agency cost? a. Monitoring managers of distant subsidiaries in foreign countries is more difficult. b. Managers from different cultures may not follow uniform goals. c. U.S. managers tend to downplay the short-term effects of decisions. d. Sheer size of the larger MNCs can create larger agency problems.
3. Several constraints confront the MNC in its attempt to maximize shareholder wealth. Which of the following is probablynot a constraint? a. competitive b. ethical c. regulatory d. environmental
4. Part of the growth of multinational business over time is due to the realization that specialization by countries can increase production efficiency, making trade essential when a country focuses on the products it produces best. This is an example of which theory of international business? a. product cycle theory b. competitive advantage theory c. imperfect markets theory d. comparative advantage theory
5. According to the ___________, firms become first established in the home market as a result of some perceived advantage they would have over existing competitors, such as a need by the market for at least one more supplier of the product. Eventually, firms will penetrate foreign markets to satisfy foreign demand. a. product cycle theory b. imperfect markets theory c. comparative advantage theory d. none of the above
6. Which method of international business obligates a firm to provide a specialized sales or service strategy, support assistance, and possibly an initial investment in the entity in exchange for