Multinational Enterprises Quiz

According to Richard E. Caves, what is a multinational enterprise (MNE) defined as?

• A company that operates in the domestic market only.

• An enterprise that controls and manages production establishments in at least two countries.

• A firm that outsources all its operations to foreign subsidiaries.

• A business that imports and exports goods without foreign establishments.

What does Richard E. Caves suggest as a reason for MNEs to carry out transactions internally within the corporation?

• To avoid paying taxes in different countries.

• To simplify the management structure.

• To overcome problems of market transactions involving hard-to-price assets.

• To increase the speed of international expansion.

What is the transition from a single national firm to a multinational enterprise often a response to, according to the text?

• A desire to diversify the company's cultural influence.

• The need to reduce the overall cost of production.

• The need to produce subsidiary is not always a discrete jump, for good economic reasons.

• A legal requirement to establish a presence in multiple countries.

What does the traditional economic theory suggest about the organization of enterprises?

• That single-plant firms will eventually take over multiplant enterprises.

• That multiplant enterprises will predominate where more profit results from common administrative control.

• That decentralized firms will lead to better market transactions.

• That the market will favor foreign partnerships over multiplant enterprises.

Which type of multiplant firm turns out broadly the same line of goods from its plants in each geographic market?

• Horizontally integrated multiplant enterprise

• Vertically integrated multiplant enterprise

• Diversified multiplant company

• Single-market multiplant firm

What is the primary reason that justifies dispersing the world’s production so that plants are found in different national markets according to the text?

• To ensure better quality control

• To reduce transportation costs

• Locational forces

• To increase market share

What is necessary for the dispersion of production in terms of governance according to the text?

• Centralized management

• Governance or transaction-cost advantage

• Decentralized management

• Multinational marketing strategies

What is the main administrative control advantage of placing plants under common administrative control?

According to the transaction-cost approach, when will horizontal MNEs exist only if the plants they control operate at?

• Higher revenue productivity than separate managements

• Lower revenue productivity than separate managements

• The same revenue productivity as separate managements

• No specific revenue productivity is required

What is the most fruitful concept for explaining the nonproduction bases for the MNE according to the text?

• The firm's ability to sell or contract its assets

• The firm's proprietary assets

• The firm's investment in physical sites

• The firm's team of human inputs