Question 1

Poor communication between subsidiaries may cause

Accepted Answer

A)  diseconomies of scale. 
B)  adverse selection. 
C)  economies of scope. 
D)  all of the above 
A)  diseconomies of scale. 
B)  adverse selection. 
C)  economies of scope. 
D)  all of the above

Question 2

'Internalisation advantages', as defined by the 'Eclectic Paradigm', are

Accepted Answer

A)  when the benefits of exporting overseas exceed those of producing overseas. 
B)  when the benefits of extending the organisation overseas exceed those of contracting with an external party. 
C)  due to tax advantages in some countries. 
D)  due entirely to scale economies. 
A)  when the benefits of exporting overseas exceed those of producing overseas. 
B)  when the benefits of extending the organisation overseas exceed those of contracting with an external party. 
C)  due to tax advantages in some countries. 
D)  due entirely to scale economies.

Question 3

Transfer pricing may be a problem for host countries because

Accepted Answer

A)  the cost of exchanging one currency for another is costly in monetary terms and time. 
B)  profits may not be accurately recorded as occurring in the host country. 
C)  profits are always removed to the host country. 
D)  as prices are transferred to the local currency, losses may occur if exchange takes place on a day when the exchange rate is low. 
A)  the cost of exchanging one currency for another is costly in monetary terms and time. 
B)  profits may not be accurately recorded as occurring in the host country. 
C)  profits are always removed to the host country. 
D)  as prices are transferred to the local currency, losses may occur if exchange takes place on a day when the exchange rate is low.

Question 4

Which of the following statements regarding joint ventures is false?

Accepted Answer

A)  Successful joint ventures will only occur if there are few contractual disadvantages in sharing resources and developing products. 
B)  Joint ventures never occur in small MNCs owing to limited owner- specific assets. 
C)  Product joint ventures that have high risks and costs tend to occur in high growth markets. 
D)  New product joint ventures typically occur among the larger MNCs that have complementary ownership- specific assets. 
A)  Successful joint ventures will only occur if there are few contractual disadvantages in sharing resources and developing products. 
B)  Joint ventures never occur in small MNCs owing to limited owner- specific assets. 
C)  Product joint ventures that have high risks and costs tend to occur in high growth markets. 
D)  New product joint ventures typically occur among the larger MNCs that have complementary ownership- specific assets.

Question 5

Which of the following would decrease globalisation?

Accepted Answer

A)  Regulation of international speculation 
B)  An increase in world trade 
C)  WTO (the World Trade Organisation) saying that countries must not prevent the use of GM foods. 
D)  An increase in demand for Coca ColaTM 
A)  Regulation of international speculation 
B)  An increase in world trade 
C)  WTO (the World Trade Organisation) saying that countries must not prevent the use of GM foods. 
D)  An increase in demand for Coca ColaTM

Question 6

According to the Harrod- Domar model, FDI could help a developing country to fill

Accepted Answer

A)  a demand gap and maximise economic growth. 
B)  an investment gap and maximise economic growth. 
C)  an income gap and raise economic growth. 
D)  a savings gap and raise economic growth. 
A)  a demand gap and maximise economic growth. 
B)  an investment gap and maximise economic growth. 
C)  an income gap and raise economic growth. 
D)  a savings gap and raise economic growth.

Question 7

Multinational companies may face several problems except

Accepted Answer

A)  language and communication. 
B)  access to new markets. 
C)  corruption. 
D)  matching sales activities to foreign markets. 
A)  language and communication. 
B)  access to new markets. 
C)  corruption. 
D)  matching sales activities to foreign markets.

Question 8

A disadvantage of globalisation is the possibility of multinational companies exploiting their market power.

Accepted Answer

A) True 
 B)False

Question 9

In 2012, the world's least developed countries received __________of the total FDI flows to developing countries.

Accepted Answer

A)  5.4% 
B)  3.7% 
C)  40% 
D)  11.3% 
A)  5.4% 
B)  3.7% 
C)  40% 
D)  11.3%

Question 10

The volume of FDI over time is

Accepted Answer

A)  always rising. 
B)  always falling. 
C)  stable. 
D)  volatile. 
A)  always rising. 
B)  always falling. 
C)  stable. 
D)  volatile.

Question 11

Multinational companies (MNC) engaging in technological transfer may lead to gains elsewhere in the economy since

Accepted Answer

A)  workers trained by the MNC move to other parts of the economy. 
B)  the MNC takes market share for inefficient local companies. 
C)  other companies in the host country may try to copy the methods. 
D)  A and C 
A)  workers trained by the MNC move to other parts of the economy. 
B)  the MNC takes market share for inefficient local companies. 
C)  other companies in the host country may try to copy the methods. 
D)  A and C

Question 12

Transfer pricing is a system of pricing for the transfer of stocks, shares and other financial instruments.

Accepted Answer

A) True 
 B)False

Question 13

Why do some businesses become multinational?

Accepted Answer

There are various motivations such as:
•

Question 14

Why would a country's balance of payments be affected by MNC investment?

Accepted Answer

Investment from a MNC represents a direc

Question 15

A conglomerate multinational is one that

Accepted Answer

A)  produces different products in different countries. 
B)  produces various stages of production in different countries. 
C)  produces the same product in more than one country. 
D)  exports more than 50% of output. 
A)  produces different products in different countries. 
B)  produces various stages of production in different countries. 
C)  produces the same product in more than one country. 
D)  exports more than 50% of output.

Question 16

Governments do not play an important role in globalisation.

Accepted Answer

A) True 
 B)False

Question 17

If the host country of a FDI project has high rates of company taxation, it will gain as the FDI company engages in transfer pricing.

Accepted Answer

A) True 
 B)False

Question 18

Explain the possible locational advantages for a multinational when it sets up in a new country.

Accepted Answer

These include the possibility of:
• bett

Question 19

Since 1990 most multinational businesses have been downsizing their operations in their 'home' country and making overseas subsidiaries more autonomous.

Accepted Answer

A) True 
 B)False

Question 20

Dunning developed a paradigm for explaining the pattern of international production. This looks at which three categories of gains from becoming multinational?

Accepted Answer

1) Ownership- specif

Exam 23: Globalisation and Multinational Business

Poor communication between subsidiaries may cause

'Internalisation advantages', as defined by the 'Eclectic Paradigm', are

Transfer pricing may be a problem for host countries because

Which of the following statements regarding joint ventures is false?

Which of the following would decrease globalisation?

According to the Harrod- Domar model, FDI could help a developing country to fill

Multinational companies may face several problems except

A disadvantage of globalisation is the possibility of multinational companies exploiting their market power.

In 2012, the world's least developed countries received __________of the total FDI flows to developing countries.

The volume of FDI over time is

Multinational companies (MNC) engaging in technological transfer may lead to gains elsewhere in the economy since

Transfer pricing is a system of pricing for the transfer of stocks, shares and other financial instruments.

Why do some businesses become multinational?

Why would a country's balance of payments be affected by MNC investment?

A conglomerate multinational is one that

Governments do not play an important role in globalisation.

If the host country of a FDI project has high rates of company taxation, it will gain as the FDI company engages in transfer pricing.

Explain the possible locational advantages for a multinational when it sets up in a new country.

Since 1990 most multinational businesses have been downsizing their operations in their 'home' country and making overseas subsidiaries more autonomous.

Dunning developed a paradigm for explaining the pattern of international production. This looks at which three categories of gains from becoming multinational?

The Business Environment and Business Economics

Economics and the World of Business

Business Organisations

The Working of Competitive Markets

Business in a Market Environment

Demand and the Consumer

Demand and the Firm

Products, Marketing and Advertising

Costs of Production

Revenue and Profit

Profit Maximisation Under Perfect Competition and Monopoly

Profit Maximisation Under Imperfect Competition

An Introduction to Business Strategy

Alternative Theories of the Firm

Growth Strategy

The Small-Firm Sector

Pricing Strategy

Labour Markets, Wages and Industrial Relations

Investment and the Employment of Capital

Reasons for Government Intervention in the Market

Government and the Firm

Government and the Market

International Trade

Trading Blocs

The Macroeconomic Environment of Business

The Balance of Payments and Exchange Rates

Banking, Money and Interest Rates

Business Activity, Employment and Inflation

Demand-Side Policy

Supply-Side Policy

International Economic Policy

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