Multinational Enterprises MCQs

Question. Rapid integration or interconnection between countries is known as:
(a) Privatisation
(b) Globalisation
(c) Liberalisation
(d) Socialisation

Answer: B

Question. What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)?
(a) Nothing. CA has nothing to do with FDI.
(b) Countries often engage in FDI in industries where the country they invest in has a comparative advantage.
(c) When a country’s firms invest abroad, this helps to create CA in the same industry at home.
(d) When a country’s firms invest abroad, this helps to create CA in the same industry in the country where they undertake the investment.

Answer: B

Question. If a German manufacturer of household appliances wants to take advantage of the cheaper labor available in the Czech Republic, which of the following actions will not serve that purpose?
(a) Build a manufacturing subsidiary there and employ Czech workers.
(b) Build a plant in the Czech Republic and send all German workers to operate it.
(c) License a Czech firm to produce its products under its own label.
(d) Contract for a Czech firm to do some of the processing for it.

Answer: B

Question. Locational advantages are based on which combination of the following specific country characteristics
(a) A large reserve of natural resources, a large local market and efficiency opportunities
(b) A small reserve of natural resources, a large local market and efficiency opportunities
(c) A small reserve of natural resources, a small local market and efficiency opportunities
(d) A large reserve of natural resources, a small local market and efficiency opportunities

Answer: A

Question. Which of the following is a definition of multinational enterprises?
(a) A company employing foreign nationals.
(b) A company headquartered in one country but having operations in other countries.
(c) A company operating in emerging economies.
(d) None of the options

Answer: B

Question. Horizontal integration occurs when
(a) Firm creates singular country production facilities, each of which produces different good or goods
(b) Firm creates multiple production facilities, each of which produces the same good or goods.
(c) Firm creates multiple production facilities, each of which produces different good or goods
(d) Firm creates singular country facilities, each of which produces the same good or goods

Answer: B

Question. Vertical integration refers to instances in which multinational corporations internalize (i.e., bring under their ownership and control) their transactions for intermediate goods
(a) True
(b) False

Answer: A

Question. …………………corporation produces in the home country or in a single country and focuses on marketing these products globally or vice a versa.
(a) Global
(b) International
(c) Transnational
(d) None of the above

Answer: A

Question. Immobility of labor among nations is
(a) Absolute.
(b) Relatively of a higher degree than among regions in the same country.
(c) Relatively easier than movement within the country.
(d) Of the same degree as within the country.

Answer: B

Question. The following factor does not differentiate international business from domestic business
(a) different currencies
(b) product quality
(c) product mobility
(d) trade policies

Answer: B

Question. Free international trade maximizes world output through
(a) Countries specializing in production of goods they are best suited for.
(b) Reduction in taxes.
(c) Increased factor income.
(d) Encouraging competition.

Answer: A

Question. Which of the following would be an example of foreign direct investment from the United States to Taiwan?
(a) A U.S. bank buys bonds issued by a Taiwan computer manufacturer.
(b) A U.S. car manufacturer enters into a contract with a Taiwan firm to make and sell it spark plugs.
(c) Microsoft hires a Taiwanese computer programmer to debug some software for it.
(d) The state of California rents space in Taipei for one of its employees to use promoting tourism in California.

Answer: B

Question. Suppose that Mexico has previously had restrictions on inflows of foreign direct investment from all sources, including the United States. Then suppose that they remove those restrictions on flows from the United States in a particular industry, say hammocks. As a result, several hammock producers in the U.S. move production to Mexico via FDI. Indicate for each of the groups below whether you expect them to gain or to lose from this flow of investment.
(a) Workers previously employed in hammock production in the U.S. Gain / Lose
(b) Workers previously employed in hammock production in Mexico. Gain / Lose
(c) Owners of firms that move production to Mexico. Gain / Lose
(d) Owners of U.S. hammock firms that do not move production to Mexico. Gain / Lose
(e) Owners of firms in Mexico that previously produced hammocks. Gain / Lose
(f) Consumers of hammocks (assume that there already was free trade in hammocks). Gain / Lose

Answer: a- lose, b-gain, c-gain, d-lose, e-lose, f-gain

Question. Which is the right sequence of stages of Internationalization
(a) Domestic, Transnational, Global, International, Multinational
(b) Domestic, International, Multinational, Global, Transnational
(c) Domestic, Multinational, International, Transnational, Global
(d) Domestic, International, Transnational, Multinational, Global

Answer: B

Question. By entering into international business, a firm expects improvement in
(a) Marketing.
(b) All spheres of marketing, operation and finance simultaneously.
(c) Any or all spheres of marketing, operation and finance.
(d) Finance only

Answer: C

Question. Select example of Indian Multinational Company
(a) Hindustan Unilever
(b) Videocon
(c) Cargill
(d) Tesco

Answer: B

Question. In which year did the government decide to remove barriers on foreign trade and investment in India?
(a) 1993
(b) 1992
(c) 1991
(d) 1990

Answer: C

Question. A foreign direct investment occurs when a company in country A invests in a company located in country B and thereby gives the investing company control over the management of the company receiving its investment. A company does not have to be the sole investor in the foreign company
(a) True
(b) False

Answer: A

Question. The —————-company produces, markets, invests and operates across the world
(a) Global
(b) International
(c) Transnational
(d) Multinational

Answer: C

Question. A multinational is a firm that controls and manages production facilities in
(a) Both developed and developing countries
(b) At least two countries
(c) One country but relies on multiple markets for the consumption of goods it produces
(d) At least two developed countries and one developing country

Answer: B

Question. Removing barriers or restrictions set by the government is called:
(a) Liberalisation
(b) Investment
(c) Favorable trade
(d) Free trade

Answer: A

Question. International business does not result in the following
(a) Innovation is encouraged.
(b) International cooperation is encouraged.
(c) Imports are rendered cheap.
(d) Consumption is minimized.

Answer: D

Question. Which is not an Indian Multinational Company?
(a) Unilever
(b) Asian Paints
(c) Piramal
(d) Wipro

Answer: A

Question. Business across several countries with some decentralization of management decision making to subsidiaries is
(a) Global business.
(b) Multinational business.
(c) Transnational business.
(d) Multi-regional business.

Answer: B

Question. A company that invests in a controlling interest in a foreign company is best described as engaging in which of the following?
(a) International investment
(b) Foreign portfolio investment
(c) Foreign indirect investment
(d) Foreign direct investment

Answer: D

Question. By having business in different countries, a firm reduces
(a) credit risk.
(b) political risk.
(c) financial risk.
(d) business risk.

Answer: B

Question. Subsidiaries consider the regional environment for policy / Strategy formulation is known as
(a) Polycentric Approach
(b) Regionocentric Approach
(c) Ethnocentric Approach
(d) Geocentric Approach

Answer: B

Question. Which of the following was created in an effort to promote free trade?
(a) World Trade Organization
(b) the Sarbanes-Oxley Act
(c) multilateral development banks
(d) the Organization for Economic Cooperation and Development

Answer: A

Question. A national company becomes an MNC when it
(a) Makes a foreign direct investment
(b) Takes out a foreign loan
(c) Imports a foreign product
(d) Exports a foreign product

Answer: A

Question. ……………is the application of knowledge which redefines the boundaries of global business
(a) Cultural Values
(b) Society
(c) Technology
(d) Economy

Answer: C

Question. Theory of Mercantilism propagates
(a) Encourage exports and imports
(b) Encourage exports and discourage imports
(c) Discourage exports and imports
(d) Discourage exports and encourage imports

Answer: B