tcqt Quiz

Which of the following could reduce agency problems for an MNC?

• stock options as managerial compensation

• investor monitoring

• hostile takeover threat

• All of these are forms of corporate control that could reduce agency problems for an MNC.

Due to the risks involved in international business, firms should:

• maintain international business to no more than 20% of total business.

• None of these are correct.

• only consider international business in major countries.

• maintain international business to no more than 35% of total business.

Licensing obligates a firm to provide ____, while franchising obligates a firm to provide ____.

• a specialized sales or service strategy; a specialized sales or service strategy

• its technology; its technology

• its technology; an initial investment

• its technology; a specialized sales or service strategy

• a specialized sales or service strategy; its technology

The agency costs of an MNC are likely to be lower if it:

• scatters its subsidiaries across many foreign countries AND increases its volume of international business.

• uses a centralized management style.

• increases its volume of international business.

• scatters its subsidiaries across many foreign countries.

Which of the following theories identifies specialization as a reason for international business?

• imperfect markets theory

• None of these are correct.

• product cycle theory

• theory of comparative advantage

For an MNC, agency costs are typically:

• the same as agency costs of a small purely domestic firm.

• nonexistent

• smaller than agency costs of a small purely domestic firm.

• larger than agency costs of a small purely domestic firm.

Four MNCs generate the same level of sales. The MNC that ______________________would likely have the most direct foreign investment.

• imports products from unrelated firms in other countries and sells them locally

• exports all of its products

• produces and sells its products locally

• acquires a foreign firm that produces most of its products to be sold in that foreign country

The commonly accepted goal of an MNC is to:

• maximize international sales.

• maximize shareholder wealth.

• maximize short-term earnings.

• maximize short-term earnings AND minimize risk.

• minimize risk

Which of the following theories identifies the non-transferability of resources as a reason for international business?

• imperfect markets theory

• theory of comparative advantage

• product cycle theory

• None of these are correct

Which of the following theories suggests that firms seek to penetrate new markets over time?

• product cycle theory

• imperfect markets theory

• theory of comparative advantage

• None of these are correct.