High capital mobility is forcing emerging market nations to choose between free-floating regimes and currency board or dollarization regimes. What are the main outcomes of each of these regimes from the perspective of emerging market nations?
> Do shareholder wealth maximization and stakeholder capitalism have the same time-horizon for the strategic, managerial, and financial objectives of the firm? How do they differ?
> Explain the assumptions and objectives of the stakeholder capitalization model.
> Explain the assumptions and objectives of the shareholder wealth maximization model.
> Why is this separation so critical to the understanding of how businesses are structured and led?
> How does ownership alter the control of a business organization? Is the control of a private firm that different from a publicly traded company?
> What alternative actions can shareholders take if they are dissatisfied with their company?
> In the evaluation of a potential foreign investment, how should a multinational firm evaluate cash flows in the host foreign country that are blocked from being repatriated to the firm's home country?
> What are the main summary statements of the balance of payments accounts and what do they measure?
> What are the primary drivers of corporate governance across the globe? Is the relative weight or importance of some drivers increasing over others?
> What are the four major types of governance regimes and how do they differ?
> Define corporate governance and the various stakeholders involved in corporate governance. What is the difference between internal and external governance?
> What is a hybrid? How may it be managed differently?
> What are the predominant ownership forms in global business?
> What is the difference between a “real” asset and a “financial” asset?
> What are the main component accounts of the current account? Give one debit and one credit example for each component account for the United States.
> If the BOP were viewed as an accounting statement, would it be a balance sheet of the country’s wealth, an income statement of the country’s earnings, or a funds flow statement of money into and out of the country?
> Why does the BOP always “balance”?
> Should the anticipated internal rate of return (IRR) for a proposed foreign project be compared to a) alternative home country proposals, b) returns earned by local companies in the same industry and/or risk class, or c) both? Justify your answer.
> What are the two main types of economic activity measured by a country’s BOP?
> What does it mean to describe the balance of payments as a flow statement?
> Business managers and investors need BOP data to anticipate changes in host country economic policies that might be driven by BOP events. From the perspective of business managers and investors list three specific signals that a country’s BOP data can pr
> What institution provides the primary source of similar statistics for balance of payments and economic performance worldwide?
> Brazil has experienced periodic depreciation of its currency over the past 20 years despite occasionally running a current account surplus. Why has this phenomenon occurred?
> The U.S. dollar has maintained or increased its value over the past 20 years despite running a gradually increasing current account deficit. Why has this phenomenon occurred?
> Why is China's twin surpluses – a surplus in both the current and financial accounts – considered unusual?
> Classify the following as a transaction reported in a sub-component of the current account or the capital and financial accounts of the two countries involved: a. A U.S. food chain imports wine from Chile. b. A U.S. resident purchases a euro-denominated
> What are the primary sub-components of the financial account? Analytically, what would cause net deficits or surpluses in these individual components?
> What is a country’s net international investment position and how does it differ from the balance of payments?
> Capital projects provide both operating cash flows and financial cash flows. Why are operating cash flows preferred for domestic capital budgeting but financial cash flows given major consideration in international projects?
> What is the difference between a direct foreign investment and a portfolio foreign investment? Give an example of each. Which type of investment is a multinational industrial company more likely to make?
> What is the balance of payments?
> Explain what is meant by the term impossible trinity and why it is in fact "impossible."
> What does it mean to say the international monetary system today is a global eclectic?
> How does a crawling peg fundamentally differ from a pegged exchange rate?
> What do the terms de facto and de jure mean in reference to the International Monetary Fund's use of the terms?
> What are the advantages and disadvantages of fixed exchange rates?
> Speaking very specifically – technically, what does a floating rate of exchange mean? What is the role of government?
> What was the foundation of the Bretton Woods international monetary system, and why did it eventually fail?
> What are the main phases that Ganado passed through as it evolved into a truly global firm? What are the advantages and disadvantages of each?
> Which viewpoint gives results closer to the effect on consolidated earnings per share?
> What is the difference between an international firm and a multinational firm?
> What do firms become multinational?
> What is the role of market imperfections in the creation of opportunities for the multinational firm?
> At what point in the globalization process did Ganado become a multinational enterprise (MNE)?
> What did it mean under the gold standard to ‘defend a fixed exchange rate’, and what did this imply about a country's money supply?
> What are some of the risks that come with the growing globalization of business?
> What choices do you believe that China will make in terms of the Impossible Trinity as it continues to develop global trading and use of the Chinese yuan?
> What is the Triffin Dilemma? How does it apply to the development of the Chinese yuan as a true global currency?
> What are the major changes and developments that must occur for the Chinese yuan to be considered ‘globalized'?
> Which viewpoint, project or parent, gives results closer to the traditional meaning of net present value in capital budgeting?
> What are the attributes of the ideal currency?
> What are Special Drawing Rights?
> How did the Argentine currency board function from 1991 to January 2002 and why did it collapse?
> Fixed exchange rate regimes are sometimes implemented through a currency board (Hong Kong) or dollarization (Ecuador). What is the difference between the two approaches?
> Why is the formation and use of the euro considered to be of such a great accomplishment? Was it really needed? Has it been successful?
> What are the advantages and disadvantages of limiting a firm’s activities to exporting compared to producing abroad?
> The decision about where to invest abroad is influenced by behavioral factors. a. Explain the behavioral approach to FDI. b. Explain the international network theory explanation of FDI.
> Financial strategies are directly related to the OLI Paradigm. a. Explain how proactive financial strategies are related to OLI. b. Explain how reactive financial strategies are related to OLI.
> Under the gold standard, all national governments promised to follow the "rules of the game." What did this mean?
> The OLI Paradigm is an attempt to create an overall framework to explain why MNEs choose FDI rather than serve foreign markets through alternative modes.
> A strongly competitive home market can sharpen a firm’s competitive advantage relative to firms located in less competitive markets. This phenomenon is known as Porter’s “diamond of national advantage.” Explain what is meant by the “diamond of national a
> Explain briefly how economies of scale and scope can be developed in production, marketing, finance, research and development, transportation, and purchasing.
> In deciding whether to invest abroad, management must first determine whether the firm has a sustainable competitive advantage that enables it to compete effectively in the home market. What are the necessary characteristics of this competitive advantage
> MNEs strive to take advantage of market imperfections in national markets for products, factors of production, and financial assets. Large international firms are better able to exploit such imperfections. What are their main competitive advantages?
> Answer the following: a. What is the difference between expropriation and creeping expropriation? b. What is the difference between direct and indirect expropriation?
> What criteria have to be met for a government's seizure of a company's business to be considered ‘'lawful' by international law?
> Define the following types ofpolitical risk: a. Adverse regulatory change b. Breach of contract c. Expropriation
> How do the major categories of potential financial losses to multinational companies associated with political risk differ across financial form – profitability, cash flow, and asset ownership?
> How is political risk defined, and how does political risk associated with business differ from a more general political risk to all social activities? What is the difference between firm-specific risk and country-specific risk?
> After reading the chapter’s description of Ganado’s globalization process, how would you explain the distinctions between international, multinational, and global companies?
> The term “cross-border strategic alliance” conveys different meanings to different observers. What are the meanings?
> What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?
> What are the advantages and disadvantages of forming a joint venture to serve a foreign market compared to serving that market with a wholly owned production subsidiary?
> What are the advantages and disadvantages of licensing and management contracts compared to producing abroad?
> As a firm evolves from purely domestic into a true multinational enterprise, it must consider a) its competitive advantages, b) its production location, c) the type of control it wants to have over any foreign operations, and d) how much monetary cap
> List the steps involved in the export of lumber from Portland, Oregon, to Yokohama, Japan, using a confirmed letter of credit, payment to be made in 120 days.
> List the steps involved in the export of computer hard disk drives from Penang, Malaysia, to San Jose, California, using an unconfirmed letter of credit authorizing payment on sight.
> Why would an exporter insist on a confirmed letter of credit?
> Identify each party to a letter of credit (L/C) and indicate its responsibility.
> What is the major difference between currency risk and risk of non-completion? How are these risks handled in a typical international trade transaction?
> What is different about international financial management?
> Explain the difference between a letter of credit (L/C) and a draft. How are they linked?
> What reasons can you give for the observation that intrafirm trade is now greater than trade between non-affiliated exporters and importers?
> Which assets play the most critical role in linking the major institutions that make up the global financial marketplace?
> The term globalization has become widely used in recent years. How would you define it?
> What does it mean for a country—or its government—to compete for business on the basis of taxation?
> How is cross-border digital commerce challenging the traditional ways in which multinational companies are taxed?
> What is a corporate inversion, and why do many U.S. corporations want to pursue it although it is highly criticized by public and private parties alike?
> What is a tax haven? Is it the same thing as an international offshore financial center? What is the purpose of a multinational creating and operating a financial subsidiary in a tax haven?
> What role does transfer pricing have within multinational companies when measuring management performance? How can transfer pricing practices within a firm conflict with performance measurement?
> Explain how the check-the-box regulatory change altered the effectiveness of Subpart F income regulations.
> Key to understanding most theories is what they say and what they don’t. Name four or five key limitations to the theory of comparative advantage.
> For what reason might an exporter use standard international trade documentation (letter of credit, draft, order bill of lading) on an intrafirm export to its parent or sister subsidiary?
> Define cross-crediting and explain why it may or may not be consistent with a worldwide tax regime.
> What is Section 482 of the U.S. Internal Revenue Code and what guidelines does it recommend when setting transfer prices?
> What is the income tax effect, and how may a multinational firm alter transfer prices as a result of the income tax effect?
> What is fund positioning?
> What is a transfer price and can a government regulate it? What difficulties and motives does a parent multinational firm face in setting transfer prices?
> What is a controlled foreign corporation and what is its significance in global tax management?
> What is earnings stripping, and what are some examples of how multinational firms pursue it?
