Chap 2 (multiple choice)

The definition of a multinational enterprise (MNE) is that it is a firm that __________.

• exports more than it imports.

• sells in many markets all over the world.

• operates and controls production or distribution facilities in more than one nation.

• has foreign stockholders.

Two activities to supply foreign markets may be __________.

• to exporting to an overseas market and manufacturing in it.

• to exporting goods to an overseas market and exporting services to it.

• to manufacture in an overseas market and licensing technology.

• to establish joint ventures and wholly-owned manufacturing facilities.

In the past, FDI has followed foreign trade because __________.

• foreign trade is less expensive and less under threat.

• the business can be expanded by management in great increments.

• an export department has already been built and has hired sales representatives to live in foreign markets.

• the firm has already set up its own sales company in order to import in its own name.

An enterprise makes a decision to invest abroad because __________.

• it can get a higher profit for the same value of investment

• it can get a lower profit for the same value of investment

• it cannot face domestic competition any longer

• it lacks the workforce in the home nation

Frequently, a firm will travel overseas to __________.

• keep its local market protected

• get greater profits

• have a product test in the market

• All of the above.

A __________ in a multinational enterprise is the headquarters which are located in the home country of the multinational enterprise.

• parent firm

• foreign affiliate

• foreign firm

• parent affiliate

Multinational Corporations want to invest in other countries when there are __________.

• natural resources, low labor costs and strict tax policies

• liberalized markets, relaxed regulations and high wages

• stable exchange rates, political stability and low wages

• low wages, political stability and many SOEs

A lot of international firms are scattering the production systems’ activities of places which are near available resources because of __________.

• no government barriers to trade in the new business environment

• decreasing competition from global firms

• new production and communications technological facilities

• significantly decreasing shipping costs

Local companies often take the control of the distribution channels, the resources of finance, and the marketing know-how, but they __________.

• lack competent managers to have daily operations efficiently

• do not get access to raw materials

• lack the products for marketing to capitalize on their unique market position

• need the assistance and experience from multinational companies

• are overpowered by multinational companies

Focusing attention on a nation that is already a sizable purchaser of goods stemming from the would-be exporter's country can bring some benefits. Which of the following is not a good thing?

• Relatively favorable business environment in the important nation

• Elimination of export and import rules.

• Construction of satisfactory transportation facilities

• Abundant foreign exchange to pay for the exports.