MultinationalFinanceIM(1)
2023年10月28日发(作者：大蒜生长观察日记(精选39篇))
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Chapter 1
Current Multinational Financial Challenges and the Global Economy
Questions
1. Globalization and the MNE. The term globalization has become very widely used in recent years.
How would you define it?
defines globalization as " the development of an increasingly integrated global economy
marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets. "
Also, Narayana Murthy ' s quote may be a good place to start a discussion ofz^bbali
I define globalization as producing where it is most cost-effective, selling where it is most profitable, and
sourcing capital where it is cheapest, without worrying about national boundaries.
Narayana Murthy, President and CEO, Infosys
2. Globalization and Value Creation. What does a MNE need in order for it to create value through the
globalization process?
Global business, like any business, is the social science of managing people to organize, maintain, and grow
the collective productivity toward accomplishing productive goals, typically to generate profit and value for its
owners and stakeholders. A multinational enterprise (MNE) needs three fundamental elements in order to
build firm value: (1) an open marketplace; (2) high quality strategic management; and (3) access to capital.
3. Value Creation and the Concept of Capitalism. How does the concept of capitalism actually apply
to the globalization process of a business, as it moves from elemental to multinational stages of development?
Open markets and insightful leadership is all for naught if the MNE cannot gain ready access to affordable
capital. It is capital that allows the investment needed to obtain the technology, execute the strategy, and
expand across global markets. It is the capitalism; it isapieaibility dhthe
enterprise to reach out and obtain resources from outside of the firm to pursue the firm create the value for
all of the key stakeholders in the enterprise itself, and subsequently for the community and society of which
it is an integral element.
4. Theory of Comparative Advantage. Define and explain the theory of comparative advantage.
The theory of comparative advantage provides a basis for explaining and justifying international trade in a
model world assumed to enjoy free trade, perfect competition, no uncertainty, costless information, and no
government interference. The theory contains the following features:
• Exporters in Country A sell goods or services to unrelated importers in Country B, while exporters in
Country B sell goods or services to importers in Country A.
• Firms in Country A specialize in making products that can be produced relatively efficiently, given Country A ' s
endowment of factors of production: that is, land, laboapital, and technology. Firms in Country B do likewise, given
the factors of production found in Country B. In this way the total combined output of A and B is maximized.
• Because the factors of production cannot be moved freely from Country A to Country B, the benefits of specialization
are realized through international trade.
• The way the benefits of the extra production are shared depends on the terms of trade, the ratio at which quantities of the physical goods are traded. Each country termined by sspplre is de
and demand in perfectly competitive markets in the two countries. Neither Country A nor
Country B is worse off than before trade, and typically both are better off, albeit perhaps unequally.
MNEs strive to take advantage of imperfections in national markets for products, factors of production, and financial
assets. Large international firms are better able to exploit such competitive factors as economies of scale, managerial
and technological expertise, product differentiation, and financial strength than are their local competitors.
5. Limitations of Comparative Advantage. Key to understanding most theories is what they say and what they don ' t.
What are four or five key limitations to the theory of comparative advantage?
Although international trade might have approached the comparative advantage model during the nineteenth century,
it certainly does not today, for the following reasons:
• Countries do not appear to specialize only in those products that could be most efficiently
produced by that country ' s particular factors of production. Instead, governments interfere with comparative
advantage for a variety of economic and political reasons, such as to achieve full employment, economic
development, national self-sufficiency in defense-related industries, and protection of an agricultural sector ' s
way of life. Government interference takes the form of tariffs,
quotas, and other non-tariff restrictions.
• At least two of the factors of production, capital and technology, now flow directly and easily between countries,
rather than only indirectly through traded goods and services. This direct flow occurs between related subsidiaries
and affiliates of multinational firms, as well as between unrelated firms via loans, and license and management
contracts. Even labor flows between countries such as immigrants into the United States (legal and illegal),
immigrants within the European Union, and other unions.
• Modern factors of production are more numerous than in this simple model. Factors considered in the location of
production facilities worldwide include local and managerial skills, a dependable legal structure for settling contract
disputes, research and development competence, educational levels of available workers, energy resources,
consumer demand for brand name goods, mineral and raw material availability, access to capital, tax differentials,
supporting infrastructure (roads, ports, communication facilities), and possibly others.
• Although the terms of trade are ultimately determined by supply and demand, the process by which the terms are
set is different from that visualized in traditional trade theory. They are determined partly by administered pricing in
oligopolistic markets.
• Comparative advantage shifts over time as less developed countries become more developed and realize their
latent opportunities. For example, over the past 150 years comparative advantage in producing cotton textiles has
shifted from the United Kingdom to the United States, to Japan, to Hong Kong, to Taiwan, and to China.
• The classical model of comparative advantage did not really address certain other issues such as the effect of
uncertainty and information costs, the role of differentiated products in imperfectly competitive markets, and
economies of scale.
Nevertheless, although the world is a long way from the classical trade model, the general principle of comparative
advantage is still valid. The closer the world gets to true international specialization, the more world production and
consumption can be increased, provided the problem of equitable distribution of the benefits can be solved to the
satisfaction of consumers, producers, and political leaders. Complete specialization, however, remains an unrealistic
limiting case, just as perfect competition is a limiting case in microeconomic theory.
6. Trident ' s GlobalizationAfter reading the chapter ' s description of Trident ' s globalization p
how would you explain the distinctions between international, multinational, and global companies.
The difference in definitions for these three terms is subjective, with different writers using different terms at different
times. No single definition can be considered definitive, although as a general matter the following probably reflect
general usage.
International simply means that the company has some form of business interest in more than one country. That international business interest may be no more than exporting and importing, or it may include having branches or
incorporated subsidiaries in other countries. International trade is usually the first step in becoming
a international, "
but the term also encompasses foreign subsidiaries
for the single purpose of marketing, distribution, or financing. The term international is also used to encompass what
are defined asmultinational and global below.
Multinational is usually taken to mean a company that has operating subsidiaries and performs a full set of its major
operations in a number of countries. A multinational company is often presumed to operate in a greater number of
countries than simply an international company. A multinational company is presumed to operate with each foreign
unit " standing on its own
although that term does not preclude specialization by country and/or supplying parts from one country operation to
another.
Global is a newer term similar to
operating around the globe.
" multinational " but infers an even larger international presence
7. Trident, the MNE. At what point in the globalization process did Trident become a multinational
enterprise (MNE)?
Trident became a MNE when it began to establish foreign sales and service subsidiaries, followed by creation of
manufacturing operations abroad or by licensing foreign firms to produce and service Trident products. This
multinational phase usually follows the international phase, which involves the import and/or export of goods and/or
services.
8. Trident ' s AdvantageWhat are the main advantages that Trident gains by developing a multinational
presence?
a. Entry into new markets, not currently served by the firm, which in turn allow the firm to grow and possibly to
acquire economies of scale.
b. Acquisition of raw materials, not available elsewhere.
c. Achievement of greater efficiency, by producing in countries where one or more of the factors of production are
underpriced relative to other locations.
d. Acquisition of knowledge and expertise centered primarily in the foreign location.
e. Location of the firms ' foreign operations in countries deetioedypsdife.
9. Trident ' s Phaseshat are the main phases that Trident passed through as it evolved into a truly
10. Financial Globalization. How do the motivations of individuals, both inside and outside the
organization or business, define the limits of financial globalization?
If influential insiders in corporations and sovereign states pursue the goal of maximizing firm value,
there will be a definite and continuing growth in financial globalization. But if these same influential
insiders pursue their own personal agendas which may increase their personal power, influence, or
wealth, then capital will not flow into these sovereign states and corporations. This will, in turn,
create limitations to globalization in finance. The result is the growth of financial inefficiency and
the segmentation of globalization outcomes creating winners and losers.
The three fundamental elements financial theory, global business, management beliefs and
actions—combine to present either the problem or the solution to the growing debate over the
benefits of globalization to countries and cultures worldwide.
Fundamentals of Multinational Finance, "Moffett)
global firm? What are the advantages and disadvantages of each?
a.
International trade . Two advantages are finding out if the firms ts are despeiddiiicthe foreign country and
learning about the foreign market. Two disadvantages are lack of control over the final sale and service to
final customer (many exports are to distributors or other types of firms that in turn resell to the final customer)
and the possibility that costs and thus final customer sales prices will be greater than those of competitors
that manufacture locally.
b.
Foreign sales and service offices. The greatest advantage is that the firm has a physical presence in the
country, allowing it greater control over sales and service as well as allowing it to learn more about the local
market. The disadvantage is the final local sales prices, based on home country plus transportation costs,
may be greater than competitors that manufacture locally.
c.
Licensing a foreign firm to manufacture and sell . The advantages are that product costs are based on local
costs and that the local licensed firm has the knowledge and expertise to operate efficiently in the foreign
country. The major disadvantages are that the firm might lose control of valuable proprietary technology and
that the goals of the foreign partner might differ from those of the home country firm. Two common problems
in the latter category are whether or not the foreign firm (that is manufacturing the product under license) is
a shareholder wealth or corporate wealth maximizer, which in turn often leads to disagreements about
reinvesting earning to achieve greater future growth versus making larger current dividends to owners and
payments to other stakeholders.
Part ownership of a foreign, incorporated, subsidiary; i.e., a joint venture . The advantages and
d.
disadvantages are similar to those for licensing: Product costs are based on local costs and that the local
joint owner presumably has the knowledge and expertise to operate efficiently in the foreign country. The
major disadvantages are that the firm might lose control of valuable proprietary technology to its joint
venture partner, and that the goals of the foreign owners might differ from those of the home country firm.
Direct ownership of a foreign, incorporated, subsidiary . If fully owned, the advantage is that the foreign
operations may be fully integrated into the global activities of the parent firm, with products resold to other
e.
units in the global corporate family without questions as to fair transfer prices or too great specialization.
(Example: The Ford transmission factory in Spain is of little use as a self-standing operation; it depends on
its integration into Ford ' s European operations.) The disadvantage is that the firm may come to be
identified as a " foreign exploiter
politicians find it advantageous to attack foreign owned businesses.
Chapter 1 Current Multinational Challenges and the Global Economy Multiple Choice and True/ False Questions
1.1 The Global Financial Marketplace
1) Which of the following firms are NOT considered to be multinational enterprises (MNEs) even if
they have operations in more than one country?
A) for-profit companies
B) not-for-profit organizations
C) non-government organizations (NGOs)
D) all of the above may be considered MNEs
Answer: D
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Recognition
2) "BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of
advanced economic development. The BRIC countries are.
A) Belgium, Romania, Italy, and Canada
B) Brazil, Russia, India, and China
C) Britain, Romania, Israel, and Colombia
D) Brazil, Russia, Italy, and Chile
Answer: B
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Recognition
3) According to the authors, which of the following groups or securities are at the "heart" to the
global capital markets?
A) debt securities issued by governments
B) bank loans and corporate bons
C) equity securities
D) derivative securities
Answer: A
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Recognition4) are the largest markets in the world.
A) United States equity markets
B) European debt markets
C) Global currency markets
D) Chinese export markets
Answer: C
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Recognition
5) Domestic currencies of one country on deposit in a second country are called.
A) export deposits
B) eurocurrencies
C) import deposits
D) forocurrencies
Answer: B
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Recognition
6) Eurocurrency deposits are an efficient and convenient money market device for holding excess
corporate liquidity.
Answer: TRUE
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Recognition
7) The Eurocurrency loan market is characterized by narrow interest rate spreads between
deposit and loan rates. This is due in part to which of the following factors?
A) The Eurocurrency market is a "wholesale" market..
B) Loan amounts are very large, often in excess of $500,000.
C) Eurocurrency borrowers are typically large, low-risk corporations or government entities.
D) All of the above are legitimate reasons for the narrow spread in the Eurocurrency market.
Answer: D
Diff: 1
Topic: 1.1 The Global Financial Marketplace
Skill: Conceptual1.2 The Theory of Comparative Advantage
1) The theory that suggests specialization by country can increase worldwide production is
A) the theory of comparative advantage
B) the theory of foreign direct investment
C) the international Fisher effect
D) the theory of working capital management
Answer: A
Diff: 1
Topic: 1.2 Comparative Advantage
Skill: Recognition
2) Of the following, which would NOT be considered a way that government interferes with
comparative advantage?
A) tariffs
B) managerial skills
C) quotas
D) other non-tariff restrictions
Answer: B
Diff: 1
Topic: 1.2 Comparative Advantage
Skill: Recognition
3) Comparative advantage shifts over time as less developed countries become more developed
and realize their latent opportunities.
Answer: TRUE
Diff: 1
Topic: 1.2 Comparative Advantage
Skill: Recognition
4) Although the world is a long way from the classical trade model, the general principle of
comparative advantage is still valid.
Answer: TRUE
Diff: 1
Topic: 1.2 Comparative Advantage
Skill: AnalyticalTABLE 1.1
Use the information in the table to answer the following question(s).
___________ Prod—tiori C-lability _________________
Containers of Snowboards Containers of Digital Cameras
Austria has 1000
production units：
Russia has 1000
15 containcrs/unit
12 contatncrs/unit
S ccntaincrs/unit
3 con Laine rs/unit
production units:
5) Refer to Table 1.1. A production unit in Austria has a/an over a production unit in
Russia in.
A) absolute disadvantage; digital cameras
B) absolute disadvantage; snowboards
C) absolute advantage; both cameras and snowboards
D) none of the above
Answer: C
Diff: 2
Topic: 1.2 Comparative Advantage
Skill: Conceptual
6) Refer to Table 1.1. Austria has a larger relative advantage over Russia in the production of
at a ratio of.
A) snowboards; 5 to 4
B) cameras; 8 to 3
C) snowboards; 8 to 3
D) cameras; 3 to 8
Answer: B
Diff: 2
Topic: 1.2 Comparative Advantage
Skill: Conceptual
7) Refer to Table 1.1. Assume no trade between Russia and Austria. If each country put 50% of
their production units into each product, the total number of snowboards and digital cameras
produced by the two countries combined are and.
A) 15,000 snowboards; 3,000 digital cameras
B) 6,000 snowboards; 4,000 digital cameras
C) 2,750 digital cameras; 6,750 snowboards
D) 15,000 digital cameras; 1,000 snowboards
Answer: C
Diff: 2
Topic: 1.2 Comparative Advantage
Skill: Analytical 8) Refer to Table 1.1. If trade takes place at Brazil's domestic price,snowboards will be required
to obtain 1 digital camera.
A) 4
B) 2 and 2/3
C) 1.25
D) 0.25
Answer: A
Diff: 2
Topic: 1.2 Comparative Advantage
Skill: Analytical
9) Refer to Table 1.1. If each country specializes in their production with Austria producing only
digital cameras and Russia producing only snowboards, at a trading rate of three snowboards per
digital camera, how many cameras and snowboards will be available to be consumed in Austria if
they trade 3,000 cameras to Russia?
A) 9,000 snowboards and 5,000 digital cameras
B) 3,000 snowboards and 3,000 digital cameras
C) 3,000 snowboards and 9,000 digital cameras
D) There is not enough information to answer this question.
Answer: A
Diff: 2
Topic: 1.2 Comparative Advantage
Skill: Analytical
10) Refer to Table 1.1. If each country specializes in their production with Austria producing only
digital cameras and Russia producing only snowboards, at a trading rate of three snowboards per
digital camera, how many cameras and snowboards will be available to be consumed in Russia if
they trade 9,000 snowboards to Austria?
A) 9,000 snowboards and 5,000 digital cameras
B) 3,000 snowboards and 3,000 digital cameras
C) 3,000 snowboards and 9,000 digital cameras
D) There is not enough information to answer this question.
Answer: C
Diff: 2
Topic: 1.2 Comparative Advantage
Skill: Analytical1.3 What is Different about Global Financial Management?
1) Which of these factors may differ for management of a domestic firm vs an international firm?
A) culture
B) corporate governance
C) political risk
D) All of the above may differ.
Answer: D
Diff: 1
Topic: 1.3 Global Financial Management
Skill: Recognition
2) Which of these issues must be addressed by domestic financial managers but may be ignored
by international financial managers?
A) capital budgeting decisions
B) capital structure decisions
C) working capital management decisions
D) All of the above must also be addressed by international financial managers.
Answer: D
Diff: 1
Topic: 1.3 Global Financial Management
Skill: Recognition
1.4 Market Imperfections: A Rationale for the Existence of the Multinational Firm
1) MNEs look to exploit in national markets for products, factors of production, and/or
financial assets.
A) imperfections
B) perfect capital markets
C) corrupt governments
D) none of the above
Answer: A
Diff: 1
Topic: 1.4 Market Imperfections
Skill: Recognition
2) Large international firms may be better able to exploit such competitive factors as than are their
domestic competitors.
A) economies of scale
B) technological expertise
C) product differentiation
D) all of the above
Answer: D
Diff: 1
Topic: 1.4 Market Imperfections
Skill: Recognition 3) Once established abroad, large MNEs internal information networks typically fail to help
implement market opportunities compared to their purely domestic counterparts.
Answer: FALSE
Diff: 1
Topic: 1.4 Market Imperfections
Skill: Conceptual
1.5 The Globalization Process
1) The phase of the globalization process characterized by imports from foreign suppliers and
exports to foreign buyers is called the
A) domestic phase.
B) multinational phase.
C) international trade phase.
D) import-export banking phase.
Answer: C
Diff: 1
Topic: 1.5 The Globalization Process
Skill: Recognition
2) The authors describe the multinational phase of globalization for a firm as one characterized by
the
A) ownership of assets and enterprises in foreign countries.
B) potential for international competitors or suppliers even though all accounts are with domestic
firms and are denominated in dollars.
C) imports from foreign suppliers and exports to foreign buyers.
D) requirement that all employees be multilingual.
Answer: A
Diff: 1
Topic: 1.5 The Globalization Process
Skill: Recognition
3) Of the following, which was NOT mentioned by the authors as an increase in the demands of
financial management services due to increased globalization by the firm?
A) evaluation of the credit quality of foreign buyers and sellers
B) foreign consumer method of payment preferences
C) credit risk management
D) evaluation of foreign exchange risk
Answer: B
Diff: 1
Topic: 1.5 The Globalization Process
Skill: Recognition
4) Typically, a firm in its domestic stage of globalization has all financial transactions in its
domestic currency.
Answer: TRUE Diff: 1
Topic: 1.5 The Globalization Process
Skill: Conceptual
5) A firm in the International Trade Phase of Globalization
A) makes all foreign payments in foreign currency units and all foreign receipts in domestic
currency units.
B) receives all foreign receipts in foreign currency units and makes all foreign payments in
domestic currency units.
C) bears direct foreign exchange risk.
D) none of the above.
Answer: C
Diff: 1
Topic: 1.5 The Globalization Process
Skill: Conceptual
6) The exposure to foreign exchange risk known as Translation Exposure may be defined as
A) changes in reported owners' equity in consolidated financial statements caused by a change in
exchange rates.
B) the impact of settling outstanding obligations entered into before change in exchange rates but
to be settled after change in exchange rates.
C) the change in expected future cash flows arising from an unexpected change in exchange
rates.
D) all of the above.
Answer: A
Diff: 1
Topic: 1.5 The Globalization Process
Skill: Conceptual
7) The twin agency problems limiting financial globalization are caused by these two groups acting
in their own self-interests rather than the interests of the firm.
A) rulers of sovereign states and unsavory customs officials
B) corporate insiders and attorneys
C) corporate insiders and rulers of sovereign states
D) attorneys and unsavory customs officials
Answer: C
Diff: 1
Topic: 1.5 The Globalization Process
Skill: Recognition
Essay Questions
1.1 The Global Financial Marketplace
1) The global financial marketplace consists of assets, institutions, and linkages. Explain how these
factors come together to form the marketplace we know today. Answer: Financial assets , such as government securities, are at the heart of today's global
financial marketplace. These securities set the standard and establish rate and price benchmarks
for other financial assets sourced by private and public firms and NGOs. Central banks help
establish and implement monetary policy and regulate the commercial banks which take deposits
and make loans. The assets and institutions are linked by the interbank networks operating
worldwide that are so necessary for actual trading to take place.
Diff: 3
Topic: 1.1 The Global Financial Marketplace
1.2 The Theory of Comparative Advantage
1) Despite the underlying advantages of the Theory of Comparative Advantage, countries do not
appear to specialize in producing only those goods and services that could most efficiently be
produced domestically. Provide at least three reasons why governments interfere with comparative
advantage and the techniques they may use to enforce their objectives..
Answer: Governments interfere for several reasons. The authors suggest several reasons for this
including national objectives for full employment, economic development, self-sufficiency, national
defense, and agricultural protection. Common forms of government interference are tariffs, quotas,
and other types of restrictions. Political influence may also include the manipulation of international
standards of trade that benefit their own country more than others. Diff: 3
Topic: 1.2 Comparative Advantage
1.3 What is Different about Global Financial Management?
1) There are no essay questions in this section.
1.4 Market Imperfections: A Rationale for the Existence of the Multinational Firm
1) List and explain three strategic motives why firms become multinationals and give an example of
each.
Answer: The authors provide 5 strategic motives for firms to become multinationals: market
seekers, raw materials seekers, production efficiency seekers, knowledge seekers, and political
safety seekers. Market seekers are looking for more consumers for their products such as
automobiles or steel. Knowledge seekers may be looking for an educated workforce similar to the
way firms seeking R and D set up shop in university towns. Raw materials seekers may be after
commodities such as oil or copper. Production efficiencies may occur in countries like Mexico that
have capable workers and lower wages. Political safety seekers are looking for countries that will
not expropriate their assets, so they may stay away from countries that in the post have engaged in
such activities.
Diff: 3
Topic: 1.4 Market Imperfections
1.5 The Globalization Process
1) There are no essay questions in this section.