W3P1 (lecture): Defining an MNE Flashcards
Which of the following best defines a “host country” in the context of a Multinational Enterprise (MNE)?
A) The country where the MNE’s management is based
B) The country where the MNE’s headquarters operates
C) The country where the MNE conducts operations outside its home base
D) The country that provides the MNE with the most raw materials
C
Which of the following differentiates an MNE from a purely domestic company?
A) Engages in extensive lobbying activities in its home country
B) Invests in research and development in a single nation
C) Operates and manages production facilities in multiple countries
D) Limits its operations to importing goods from abroad
C
The Big Mac Index, used to measure purchase-power parity (PPP), suggests what about currency valuation?
A) Currencies should appreciate in response to higher demand for local products
B) Exchange rates should eventually adjust to ensure identical goods have the same price across different countries
C) The value of a currency is solely determined by inflation rates
D) Government interventions have no impact on currency exchange rates
B
What was one key innovation that allowed McDonald’s to dramatically expand its international presence in the mid-20th century?
A) Localizing menu items for each market
B) Developing a unique franchise model with standardized operations
C) Creating partnerships with local governments to reduce regulatory oversight
D) Opening high-end restaurants in urban centers
B
Which of the following represents a major challenge faced by Multinational Enterprises (MNEs) when adapting to foreign markets?
A) Navigating divergent regulatory systems that may conflict with home country standards
B) Struggling to find suppliers in developing markets
C) Lack of interest from consumers in foreign products
D) Overcoming tariff barriers that are rarely updated
A
In terms of currency valuation, what economic principle underpins the “Big Mac Index”?
A) Real exchange rate adjustments based on local economic growth
B) The idea that in the long term, goods should cost the same in every country once exchange rates are adjusted
C) The relative value of a country’s inflation rate compared to global markets
D) Exchange rates are set primarily by central banks based on trade deficits
B
What was a key factor in the global success of McDonald’s marketing strategies, particularly in the 20th century?
A) Emphasis on gourmet dining experiences
B) A focus on low prices combined with fast service and strong branding (e.g., the double arch)
C) Concentration on expanding into only high-income markets
D) Partnering with local fast-food chains to compete directly in international markets
B
What is a common reason why smaller national economies may struggle to enforce regulations on Multinational Enterprises (MNEs)?
A) Lack of domestic competition leads to MNE dominance in the market
B) Smaller economies tend to have stronger legal frameworks that discourage MNEs
C) They often limit regulation and taxation to remain attractive to large corporations
D) Domestic industries are generally more competitive than MNEs
C
Historically, how did early multinational corporations like the British East India Company manage risks associated with overseas trade?
A) Through partnerships with competing companies to pool resources
B) By securing monopoly rights and political backing from their home governments
C) By selling shares of their companies to private investors in overseas colonies
D) Through agreements to only operate within European borders
B
Which challenge did Apple face when selling products in the global market, particularly with respect to local regulations?
A) Adjusting product specifications to meet the technological requirements of different regions
B) Adapting to local taxation laws, particularly in Europe
C) Ensuring that all components, such as cords, matched local standards and regulations
D) Entering markets without the proper legal authorization to sell electronics
C
