Test Bank for International Financial Management 14th Edition By Jeff Madura |All Chapters 1 - 21| Complete Guide A+

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,Chapter 1 m




Multinational Financial Management: An Overview m m m m




Lecture Outline
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Managing the MNC m m




How Business Disciplines Are Used to Manage the MNC
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Agency Problems
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Management Structure of an MNC m m m m




Why Firms Pursue International Business
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m Theory of Comparative Advantage
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m Imperfect Markets Theory m m




Product Cycle Theorym m




Methods to Conduct International Business
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International Trade m




mLicensing
mFranchising
Joint Ventures
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Acquisitions of Existing Operations m m m




mEstablishing New Foreign Subsidiaries
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mSummary of Methods m m




Valuation Model for an MNC
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m Domestic Valuation Modelm m




mMultinational Valuation Model m m




Uncertainty Surrounding an MNC’s Cash Flows
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mHow Uncertainty Affects the MNC’s Cost of
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mCapital

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,Organization of the Text
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, Multinational Financial Management: An Overview  2
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Chapter Theme m




This chapter introduces the multinational corporation as having similar goals to the purely domestic
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corporation, but a wider variety of opportunities. With additional opportunities come potential
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increased returns and other forms of risk to consider. The potential benefits and risks are introduced.
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Topics to Stimulate Class Discussion
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1. What is the appropriate definition of an MNC?
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2. Why does an MNC expand internationally?
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3. What are the risks of an MNC which expands internationally?
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4. Why must purely domestic firms be concerned about the international environment?
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POINT/COUNTER-POINT:
Should an MNC Reduce Its Ethical Standards to Compete Internationally?
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POINT: Yes. When a U.S.-based MNC competes in some countries, it may encounter some
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business norms there that are not allowed in the U.S. For example, when competing for a
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government contract, firms might provide payoffs to the government officials who will make the
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decision. Yet, in the United States, a firm will sometimes take a client on an expensive golf
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outing or provide skybox tickets to events. This is no different than a payoff. If the payoffs are
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bigger in some foreign countries, the MNC can compete only by matching the payoffs provided
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by its competitors.
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COUNTER-POINT: No. A U.S.-based MNC should maintain a standard code of ethics that applies to
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any country, even if it is at a disadvantage in a foreign country that allows activities that might
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be viewed as unethical. In this way, the MNC establishes more credibility worldwide.
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© m2021 mCengage mLearning. mAll mRights mReserved. mMay mnot mbe mcopied, mscanned, mor mduplicated, min mwhole mor min mpart, mexcept
mfor muse mas m permitted min ma mlicense mdistributed mwith ma mcertain mproduct mor mservice mor motherwise mon ma mpassword-protected

website for classroom use.