Test Bank For - Concepts 3 rd Global Edition Raymond Brooks (Al...

Test Bank For Financial Management Core Concepts 3 rd Global Edition Raymond Brooks (All Chapters 1-18, 100% Original Verified, A+ Grade) All Chapters Arranged

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Financial Management: Core Concepts, 3e, GE (Brooks)

Chapter 18 International Financial Management 18.1 Managing Multinational Operations 1) Businesses that operate in more than one country are commonly referred to as ________.

• multiamerican firms
• multinational firms
• ultranational firms
• worldwide firms

Answer: B

Diff: 1

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.2) The difficulties of managing international business operations stem from three special issues. Which of the choices below is NOT one of these?

• Political risk
• Differences in business practices
• Social fads
• Cultural differences

Answer: C

Diff: 2

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.3) ________ arise(s) from differences in customs, social norms, attitudes, assumptions, and expectations of the local society in a host country.

• Cultural risk
• Political risk
• Social fads
• Similarities in business beliefs

Answer: A

Diff: 1

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.1 Copyright © 2016, Pearson Education, Ltd. 2 / 4

4) Specific issues related to cultural differences can arise in the management of a multinational enterprise.

All of the following are related to cultural differences EXCEPT:

• a requirement to have local management.
• issues with promotion of women into management positions.
• issues with observation of religious holidays.
• nationalization of the assets of a company by the foreign government.

Answer: D

Explanation: D) Choice D is a political risk, not a cultural risk.

Diff: 1

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.Hmwrk Questions: * Taken from "Prepping for Exams" questions at the end of the chapter.5) In regard to the cultural risks related to ownership structure, which of the statements below is FALSE?

• Cultural norms work their way into laws and regulations so that the interests of the host country will

take precedence over the interest of the foreign country, the original home of the business.

• In order to start a business operation in a foreign country, it may be necessary to utilize a joint venture

business form.

• Today, there are practically no industries protected against foreign ownership in host countries.
• The ownership structure of a business can be restricted once the business ventures overseas and faces

the additional constraint of meeting ownership requirements of more than one government.

Answer: C

Explanation: C) Some industries remain HEAVILY protected against foreign ownership in host countries.

Diff: 2

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.6) In regard to the cultural risks related to human resources management, which of the statements below is TRUE?

• In some countries, women are restricted from management positions.
• The hiring of local citizens instead of bringing in foreign expatriates is often a necessary part of doing

business abroad.

• Foreign expatriates would find it difficult living and working in a community where they are seen as

taking away wages and livelihood from local citizens.

• All of these statements are true.

Answer: D

Diff: 2

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.2 Copyright © 2016, Pearson Education, Ltd. 3 / 4

7) In regard to the cultural risks related to nepotism and corrupt practices, which of the statements below is TRUE?

• The Foreign Corrupt Practices Act, passed during the administration of President Carter, makes it

illegal for U. S. citizens to pay bribes to foreign officials or leaders in order to facilitate business operations.

• If a firm does not have a competitive advantage so that it can overcome the bribery situation and still

make a profit, it may be best to look somewhere else to extend business operations.

• Companies can be forced by a local government official to hire specific individuals and place them in

positions of control.

• All of these statements are true.

Answer: D

Diff: 2

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.8) In regard to the cultural risks related to intellectual property rights, which of the statements below is

FALSE?

• Property rights, in general, refer to the right of an individual to use his or her talents and properties

(assets) for company gain.

• Intellectual property rights refer to the product or service that is created by the talents of an individual.
• The exclusive use of a specific technological advantage may be lost because local governments do not

respect or honor copyright or patent laws.

• Intellectual property rights are established through patents and copyrights in order to protect the

goods and services of the original developer and the revenues pertaining to them.

Answer: A

Explanation: A) Property rights, in general, refer to the right of an individual to use his or her talents and properties (assets) for PERSONAL gain.

Diff: 2

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.9) A major aspect of operating a business in a host country is the business risk that must be assumed.Which of the following is NOT a business risk?

• A severe drought
• The risk of the firm being nationalized by the host country.
• A rise in interest rates
• A shift in exchange rates

Answer: B

Explanation: B) Nationalization of assets is a political risk.

Diff: 2

Topic: 18.1 Managing Multinational Operations

AACSB: 3 Analytical Thinking

LO: 18.1 Understand cultural, business, and political differences in business practices.3 Copyright © 2016, Pearson Education, Ltd.

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