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International Business
Q:
A(n) ________ manager champions the ways of foreign markets as comparable, if not more enlightened, than the practices of his or her parent company and home nation.
A) ethnocentric
B) geocentric
C) monocentric
D) polycentric
Q:
What is the primary advantage of an MNE using an ethnocentric framework?
A) minimizing relocation costs
B) developing community support
C) transferring core competencies abroad
D) encouraging innovative business practices
Q:
Watson Electronics, an MNE based in Canada, tends to follow an ethnocentric staffing model. From which group will it most likely hire for upper-level management positions in its new facility in Germany?
A) home country nationals
B) third country nationals
C) host country nationals
D) local citizens
Q:
A(n) ________ staffing policy framework assumes that the practices and procedures that work at headquarters will work in foreign operations; as such, executive slots are filled by home country nationals.
A) polycentric
B) intercentric
C) ethnocentric
D) geocentric
Q:
Dixon Manufacturing, a British MNE, believes that its business practices are superior, so it does not make any policy changes in foreign markets. Dixon Manufacturing most likely takes a(n) ________ approach to staffing.
A) ethnocentric
B) polycentric
C) geocentric
D) monocentric
Q:
The three types of interpretative frameworks in international businesses are ________.
A) ethnocentric, polycentric, and geocentric
B) ethnocentric, intercentric, and monocentric
C) monocentric, neocentric, and polycentric
D) intracentric, geocentric, and neocentric
Q:
Which of the following most accurately describes the current state of HRM efforts to staff international operations?
A) Fewer women are accepting international assignments.
B) The length of permanent assignments is rising among middle-managers.
C) There are historic shortages of executive talent for international assignments.
D) Third-country nationals are quickly being replaced by localized expatriates.
Q:
Apex Enterprises, an MNE based in the U.S., is spending too much money on expatriate assignments. Which of the following methods would LEAST likely help Apex reduce expatriate costs?
A) offering cross-border commuter assignments
B) designing more short-term projects
C) establishing a localization policy
D) expanding core competencies
Q:
Monica, a Brazilian citizen, earned an MBA from Stanford University and has been working at the New York branch of Goldman Sachs for one year. Monica is being transferred to Goldman Sachs' office in Brazil where she will best be characterized as a(n) ________.
A) local
B) expatriate
C) reverse expatriate
D) third-country national
Q:
A company that decides to "localize" expatriate assignments will offer an expatriate the option of ________.
A) serving a shorter assignment in the host country
B) becoming a naturalized citizen of the host country
C) moving to an emerging market closer to the home country
D) retaining a foreign assignment provided he or she accepts the status of a local hire
Q:
Traditionally, expatriates were ________; today, HRM increasingly considers ________.
A) men; women
B) women; men
C) midlevel and midcareer executives; older employees and younger employees
D) older employees and younger employees; midlevel and midcareer executives
Q:
Today, most expatriate assignments are for ________.
A) less than one year
B) one to three years
C) three to five years
D) five to ten years
Q:
Growing demand for expatriates stems from which of the following trends?
A) the emergence of developing countries as high-growth markets
B) the resurgence of developed countries as high-growth markets
C) the reduced need for localized expatriate assignments
D) the longer-term assignments created in response to the global credit crisis
Q:
Jeanette Thompson, a native Texan, is being sent by her company, Samsung of South Korea, to head up a new facility in Hong Kong. Jeanette would be considered a(n) ________.
A) inpatriate
B) host-country citizen
C) third-country national
D) local executive
Q:
An example of a third-country national is a ________.
A) dual citizen (Canadian and U.S. citizenship) working for a Mexican company in Mexico
B) Canadian citizen working for a U.S. company in Canada
C) U.S. citizen working for a U.S. company in Canada
D) Canadian citizen working for a U.S. company in Mexico
Q:
Home-country nationals are ________.
A) used a great deal abroad by polycentric companies
B) citizens of the countries in which they are working
C) citizens of the country where the company is headquartered
D) noncitizens of the countries in which they are working
Q:
Mona, a native of India, is employed by IBM in the firm's facility in New Delhi. Mona is best described as a(n) ________.
A) expatriate
B) local
C) third-country national
D) home-country national
Q:
Which of the following is LEAST connected to superior HR management at an MNE?
A) increased productivity
B) competitive advantage
C) foreign regulations
D) value creation
Q:
There is growing consensus that human resource managers must hire, develop, reward, and retain people whose performance explicitly improves the ________.
A) productivity of the firm's core competencies
B) fit between the firm's practices and industry standards
C) firm's engagement of political authorities
D) firm's responsiveness to customer complaints
Q:
The Human Capital Index, based on a comprehensive global study of more than 2,000 companies, found that superior human capital practices were ________ correlated with a firm's financial returns and were a(n) ________ indicator of increased shareholder value.
A) negatively; lagging
B) positively; leading
C) insignificantly; timely
D) weakly; accurate
Q:
Generally, HRM is more difficult for international companies for all of the following reasons EXCEPT which one?
A) Dual career and family obligations make it tough to convince executives to leave the home office to join a foreign subsidiary.
B) Leadership styles and management practices are so similar from country to country that it is difficult to create a culture of innovation.
C) Complications arise due to enduring political, cultural, legal, and economic differences between countries.
D) Labor markets are dramatically different in the mix of workers, costs, and productivity.
Q:
________ refers to the activities that an organization carries out to put the right person into the right job in the right place at the right time for the right salary.
A) Work force analysis
B) Staff development
C) Human resource management
D) Leadership planning
Q:
HRM refers to the range of activities that a company, whether solely domestic or thoroughly global, undertakes to ________.
A) direct its strategy
B) staff its operations
C) improve its responsiveness
D) integrate business functions
Q:
Why is management of international human resources more difficult than directing human resources at the domestic level?
A) the complications that arise from political, cultural, legal, and economic differences between countries
B) the challenge posed by managers in other countries that aim to achieve global objectives for the company no matter the costs imposed on national objectives
C) the greater similarity among foreign subsidiaries than among domestic subsidiaries in terms of dependence on headquarters for resources
D) the complications posed by dealing with competing agendas from different labor unions in different countries
Q:
What is the difference between translation exposure, transaction exposure, and economic exposure?
Q:
What are the major sources of internal funds for MNEs? Why do many MNEs acquire external funds through the Eurodollar market?
Q:
How do countries differ in terms of taxation? In regards to taxation, why do some MNEs turn to offshore financial centers? Why are offshore financial centers a concern to the OECD?
Q:
What are the major sources of external funds for an MNE's normal operations? Why do MNEs use offshore financial centers to raise funds?
Q:
What is a transfer price? Why are transfer prices used?
Q:
What is capital budgeting? What types of risks are involved? How can an MNE manage these risks?
Q:
What is foreign currency translation exposure? How can this type of exposure affect an MNE?
Q:
What is multilateral netting? What are the advantages of multilateral netting?
Q:
What is an offshore financial center? What are the main characteristics of OFCs?
Q:
You are the chief financial officer at an MNE. What are your main responsibilities in this position? What taxation issues have a significant effect on the decisions you make?
Q:
Tax law variations around the world affect an MNE's capital budgeting, financing, and method of setting transfer prices.
Q:
When using a lag strategy, a company collects foreign-currency receivables before they are due when the foreign currency is expected to weaken.
Q:
The principle by which the tax authorities allow firms to reduce their tax liability by the amount of income taxes paid to a foreign government is known as a tax credit.
Q:
A tax credit is a credit on goods and services paid by one member of a corporate family to another.
Q:
A transfer price is a price on goods and services sold by one member of a corporate family to another.
Q:
The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore taxes for MNEs and the countries where they operate.
Q:
Subpart F income is passive and usually derived from operations in a tax-haven country.
Q:
Taxation is an important cash flow issue, but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary) or the location of an investment.
Q:
An option is a hedging instrument that allows one to establish a fixed exchange rate for future transactions where delivery is required.
Q:
Assume that a company has a foreign subsidiary in a country with an exchange rate that is expected to strengthen against the parent company's currency. If the parent is planning the timing for the subsidiary to send a dividend to the parent, it would probably choose a lag strategy.
Q:
An exposure that arises from effects of exchange rate changes on the competitive position of the company is called an economic exposure.
Q:
An economic exposure does not result in a change in future cash flows.
Q:
A translation exposure occurs when the dollar value of a receivable or payable from exports or imports changes as the exchange-rate changes.
Q:
A transaction exposure results in a foreign exchange gain or loss.
Q:
The combined effect of an exchange-rate change on the financial statements of a foreign subsidiary is neither a gain nor a loss because of accounting rules.
Q:
A translation exposure arises because the dollar value of the exposed asset changes as the exchange rate changes.
Q:
The process of coordinating cash inflows and outflows among subsidiaries so that only net cash is transferred is known as multilateral netting.
Q:
Capital budgeting requires companies to determine free cash flows, which are affected by factors such as local tax rates.
Q:
A major problem with MNEs using offshore financial centers is that they may give unfair tax advantages to companies.
Q:
The best way for a Euroequity to get a listing in the United States is to issue a Global Depositary Receipt.
Q:
An ADR is a negotiable certificate issued by a U.S. bank in the United States to represent the underlying shares of a foreign corporation's stock held at a custodian bank in the foreign country.
Q:
Two forms of equity financing are private placement with a venture capital firm and the equity capital market, otherwise known as the stock market.
Q:
Another source of financing, in which an investor takes an ownership position in return for shares of stock in the company and the promises of capital gains, is called debt financing.
Q:
The international bond market is much larger and more lucrative than the domestic bond market.
Q:
A French company floating a bond issued in Swiss francs in Switzerland would be selling a foreign bond.
Q:
The Eurocurrency market is a retail, rather than wholesale, market.
Q:
A Eurocurrency is any currency that is banked outside its country of origin.
Q:
Equity financing is the degree to which a firm funds the growth of a business by debt.
Q:
Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the financial marketing manager.
Q:
The long-term financing dimension of cash management deals with the selection, issuance, and management of long-term debt and equity.
Q:
Assume that U.S. MNE A earns $100,000 of foreign source income, that the tax rate in the foreign country is 40 percent, and that the tax rate in the United States is 35 percent. How much total (both domestic and foreign) tax would the company pay on that foreign source income, assuming that the tax credit principle applies?
A) $40,000
B) $35,000
C) $75,000
D) $5,000
Q:
The principle by which the tax authorities allow firms to reduce their tax liability by the amount of income taxes paid to foreign governments is known as ________.
A) transfer pricing
B) a tax credit
C) lag strategies in tax planning
D) passive income reductions
Q:
The OECD is concerned about transfer pricing practices because ________.
A) transfer pricing can help maximize a company's worldwide tax liability
B) transfer prices tend to be higher in industrial than developing countries
C) governments use transfer prices to manipulate companies' investment strategies
D) companies use transfer prices to manipulate prices and therefore taxes
Q:
If a foreign subsidiary is located in a low tax country, the parent company would probably use a ________.
A) high transfer price on inventory shipped from the parent to the subsidiary
B) high transfer price on goods sold by the subsidiary to the parent
C) low transfer price on inventory shipped from the subsidiary to the parent
D) tax credit price to minimize local tax liabilities
Q:
A price on goods and services sold by one member of a corporate family to another is known as a(n) ________.
A) transfer price
B) tax credit price
C) passive price
D) active price
Q:
According to U.S. tax law, if a foreign subsidiary earns income, ________.
A) its income is immediately taxable to the parent, irrespective of the type of income earned
B) that income is not taxable to the parent company as long as the subsidiary pays income taxes in the country where it is earned
C) passive income is taxable to the parent unless the parent company is a controlled foreign corporation
D) active income is taxable to the parent when it is remitted as a dividend
Q:
Subpart F income is ________.
A) usually earned by a branch rather than a corporation
B) not taxed to the parent unless a dividend is remitted
C) not eligible for the tax credit
D) passive and usually derived from operations in a tax-haven country
Q:
Foreign source income that is derived from the active conduct of a trade or business and therefore subject to U.S. taxation is known as ________.
A) passive income
B) active income
C) uncontrollable foreign corporation income
D) tax haven income
Q:
Foreign branch income is ________.
A) deferred from U.S. taxation until a dividend is remitted to the parent company
B) considered passive income and therefore not subject to U.S. taxation
C) directly included in the parent's taxable income in the year in which it is earned
D) considered active income and therefore deferred until future years
Q:
A U.S. importer buys merchandise from a German manufacturer worth 100,000 when the exchange rate is 0.6451 per dollar with payment due in 30 days. The importer decides to enter into a forward contract to deliver dollars for euros for 0.6329. At the time the payment is due, the spot rate is 0.6711. Based on this, which of the following is true?
A) The importer would have paid more for the merchandise at the future spot rate than at the forward rate.
B) The importer will have to pay $67,110 for the merchandise.
C) There is no foreign exchange risk to the importer since the sale is denominated in euros.
D) The exporter will receive 100,000 for the sale.
Q:
Assume that a Canadian exporter sells to a French importer and denominates the sale in euros, which opens the exporter up to foreign exchange risk. Also, assume that the exporter goes to its investment bank and enters into a contract with the bank to gain the right but not the obligation to deliver euros for Canadian dollars at an agreed-upon exchange rate. This is an example of a ________.
A) lead strategy
B) lag strategy
C) foreign-currency option
D) forward contract
Q:
A hedging instrument that allows one to establish a fixed exchange rate for future transactions where delivery is required is a(n) ________.
A) option
B) investment contract
C) future spot contract
D) forward contract
Q:
An example of an operational hedging strategy against foreign exchange risk is ________.
A) using a forward contract to establish a fixed exchange rate for future transactions
B) using local debt to balance local assets
C) using a foreign currency option to ensure access to foreign currency at a fixed exchange rate for a specific period of time
D) not using leads and lags for intercompany payments
Q:
Assume a U.S. exporter sells to a British importer and denominates the sale in dollars. If the dollar rises over time against the British pound, what types of economic exposure and/or possible strategies could the exporter or importer face?
A) The U.S. exporter has no economic risk because the sale is denominated in dollars.
B) The British importer has only economic risk if the dollar falls against the pound.
C) The U.S. exporter could lower prices in order to reduce the cost to the importer and thereby keep up sales volume.
D) The U.S. exporter does not face an economic exposure, but the British importer does because it must pay in dollars.
Q:
An economic exposure ________.
A) occurs when reporting systems are inadequate
B) generally takes place when foreign currencies weaken against the dollar
C) occurs when the sourcing and costs of components change as exchange rates change
D) is the same as a translation exposure
Q:
Which term refers to the potential for change in expected cash flows that arises from the pricing of products and the location of investments?
A) translation exposure
B) transaction exposure
C) economic exposure
D) hedge exposure