- Do you agree or disagree with the following argument. Justify.
Point: Should an MNC Reduce Its Ethical Standards to Compete Internationally?
Yes. When a U.S.-based MNC competes in some countries, it may encounter some business
norms there that are not allowed in the U.S. For example, when competing for a government
contract, firms might provide payoffs to the government officials who will make the decision.
Yet, in the United States, a firm will sometimes take a client on an expensive golf outing or
provide skybox tickets to events. This is no different than a payoff. If the payoffs are bigger
in some foreign countries, the MNC can compete only by matching the payoffs provided by
- Explain the relationship between saving, investment, and interest rate. Use appropriate
examples and a diagram to support your answer. How do the saving and investment
incentives affect the interest rate? Use a diagram to support your answer.
- Explain the difference between a monetary and fiscal policy with the help of an example.
Are these two policies interlinked? Why or why not? Which policy is more relevant to the
control of inflation and why?
- Venex Corporation, the producer of Cement in Europe, has engaged in a joint venture with
Glow, the largest cement in the US. The joint venture enables Venex to have its cement
distributed through Glow’s distribution channels in the US. In addition, it could utilize
Glow’s facilities to produce cement products that would be sold locally. In return, Venex
Corporation provided information about the European cement market to Glow.
a. How does the above arrangement help both the firms to achieve their objectives?
b. What could be the possible risk of such an arrangement to both the firms?
c. Is this arrangement between two companies helping them to overcome the barriers of international
trade? Why or why not?
- How can a credit crisis in one country can affect the other country. Give a real-world example to
support your answer.
- Why do interest rates vary among the countries? Why are interest rates normally similar for those
European countries that use the euro as their currency? Offer a reason why the government interest
rate of one country could be slightly higher than the government interest rate of another country, even
though the euro is the currency used in both countries.
- Read the following mini case and answer the question that follows:
Chapman Co. is a privately owned MNC in the U.S. that plans to engage in an initial public offering
(IPO) of stock so that it can finance its international expansion. At the present time, world stock market
conditions are very weak but are expected to improve. The U.S. market tends to be weak in periods
when the other stock markets around the world are weak. A financial manager of Chapman Co.
recommends that it wait until the world stock markets recover before it issues stock. Another manager
believes that Chapman Co. could issue its stock now even if the price would be low, since its stock price
should rise later once world stock markets recover.
Question: Who is correct? Explain.
- Read the following scenario and answer the question that follows:
Blue Corporation purchases computer chips denominated in euros on a monthly basis from a
German supplier. To hedge its exchange rate risk, this U.S. firm negotiates a three-month
forward contract three months before the next order will arrive. In other words, Blue
Corporation is always covered for the next three-monthly shipments. Because Blue
Corporation consistently hedges in this manner, it is not concerned with exchange rate
Question: Is Blue Corporation insulated from exchange rate movements? Why or why not?
- How do foreign exchange rate fluctuations affect the profits from foreign countries?
Include research finding in your answer.
- Why it is very crucial to segregate the CEO control power from shareholders for an
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