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1 Copyright 2010 Pearson Education, Inc. Mul t ina t ional Bu s in e ss F inan ce , 12 e (Eit e man , e t al) Chapt e r 1 Globalization and th e Multinational Ent e rpri s e 1.1 Globalization and Creating Value in the Multinational Enterprise Multipl e Choi ce 1) Which of the following are critical to a firm trying to reach the top of the "firm value pyramid"? A) An open market place. B) High quality strategic management. C) Access to capital. D) all of the above Answer: A Diff: 2 Topic: 1.1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 2) A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value? A) An open market place. B) High quality strategic management. C) Access to capital. D) none of the above Answer: D Diff: 2 Topic: 1.1 Globalization and Creating Value in the Multinational Enterprise Skill: Recognition 3) A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value? A) An open marketplace. B) High-quality strategic management. C) Access to capital. D) Access to qualified labor pool. Answer: A Diff: 2 Topic: 1.1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 2 Copyright 2010 Pearson Education, Inc. 4) A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value? A) An open marketplace. B) High-quality strategic management. C) Access to capital. D) Access to qualified labor pool. Answer: C Diff: 2 Topic: 1.1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual Tru e / Fal s e 1) Three necessary conditions for a firm to reach the top of the "firm value pyramid" are an open market place, high quality strategic management, and access to capital. Answer: TRUE Diff: 1 Topic: 1.1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 2) Comparative advantage is one of the underlying principles driving the growth of global business. Answer: TRUE Diff: 1 Topic: 1.1 Globalization and Creating Value in the Multinational Enterprise Skill: Recognition E ss ay 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 work force 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 Mexico that have capable workers and lower wages.... View Full Document

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