Multi International Business Facts Quiz

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Multi International Business Facts Quiz - Quiz

It is one thing to have a local business, and it is another to venture into the global market. A multinational corporation is usually a large corporation incorporated in one country which produces or sells goods or services in various countries. The companies are commonly large and are centered on parent companies. Take this quiz and test your understanding of multi-international business facts.


Questions and Answers
  • 1. 

    What do the vertical boundaries of a firm refer to?

    • A.

      The activities the firm itself performs versus purchases from independent firms

    • B.

      The level of expertise of the firm's workforce

    • C.

      The breadth of products a firm produces

    • D.

      The production output level for a firm

    • E.

      The chain of production processes from raw materials to finished good

    Correct Answer
    A. The activities the firm itself performs versus purchases from independent firms
    Explanation
    The vertical boundaries of a firm refer to the activities that the firm itself performs versus the activities that it purchases from independent firms. This means that the firm has control over certain activities and performs them in-house, while it outsources or purchases other activities from external sources. This distinction helps determine the extent to which a firm is vertically integrated and the level of control it has over its supply chain and production processes.

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  • 2. 

    Which of the following processes is most representative of a vertically integrated firm on the "make" end of the make-or-buy continuum?

    • A.

      Arm's length market transactions

    • B.

      Long-term contracts

    • C.

      Strategic alliance and joint ventures

    • D.

      Parent/subsidiary relationships

    • E.

      Perform activity internally

    Correct Answer
    E. Perform activity internally
    Explanation
    The correct answer is "Perform activity internally". This option suggests that a vertically integrated firm is more likely to perform the activity internally rather than outsourcing it to external parties. This means that the firm controls and manages the entire production process from start to finish, allowing for greater coordination and efficiency within the organization. This approach is characteristic of vertical integration, where a company seeks to control multiple stages of the supply chain to gain a competitive advantage.

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  • 3. 

    Which of the following processes is is most representative of a less integrated firm on the "buy" end of the make-or-buy continuum?

    • A.

      Arm's length market transactions

    • B.

      Long-term contracts

    • C.

      Strategic alliance and joint ventures

    • D.

      Parent/subsidiary relationships

    • E.

      Parent/subsidiary relationships

    Correct Answer
    A. Arm's length market transactions
    Explanation
    Arm's length market transactions refer to business transactions where the parties involved have no personal or close relationship with each other. In this type of transaction, the buyer and seller operate independently and there is no long-term commitment or collaboration between them. This suggests that the firm is less integrated and relies more on external suppliers or vendors for its goods or services. Therefore, arm's length market transactions are most representative of a less integrated firm on the "buy" end of the make-or-buy continuum.

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  • 4. 

    Which of the following has a downstream relationship with a Toyota Motor Corporation?

    • A.

      Steel manufacturer

    • B.

      Tire companies

    • C.

      Dealerships

    • D.

      Paint producer

    • E.

      Car parts manufacturer

    Correct Answer
    C. Dealerships
    Explanation
    Dealerships have a downstream relationship with Toyota Motor Corporation because they are the final point of sale for Toyota vehicles. Dealerships purchase vehicles from Toyota and sell them to customers, making them a crucial part of Toyota's distribution network.

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  • 5. 

    The biotechnology industry is seeing a broad pattern of disintegration due to the fact that big pharma companies are less and less doing which of the following core functions?

    • A.

      Infrastructure

    • B.

      Product innovation

    • C.

      Obtaining regulatory approval

    • D.

      Customer relationship

    • E.

      Manufacturing and communications

    Correct Answer
    B. Product innovation
    Explanation
    The biotechnology industry is experiencing disintegration because big pharma companies are decreasing their focus on product innovation. This means that they are no longer prioritizing the development of new and innovative products in the biotechnology field. This shift in focus is causing a broad pattern of disintegration within the industry, as product innovation is a crucial core function that drives growth and competitiveness. Without a strong emphasis on product innovation, the industry may struggle to keep up with advancements and meet the evolving needs of customers and regulatory requirements.

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  • 6. 

    Which of the following is a true argument regarding the make-or-buy decision process?

    • A.

      Firms should make an asset, rather than buy it, if that asset is a source of competitive advantage for the firm

    • B.

      Firms should buy, rather than make, to avoid the costs of making the product

    • C.

      Firms should make, rather than buy, to avoid paying a profit margin to independent firms

    • D.

      Firms should buy, rather than make, in general, because market firms are subject to the discipline of the market and must be efficient and innovative to survive

    • E.

      Firms should make, rather than buy, because a vertically integrated producer will be able to avoid paying high market prices for the input during periods of peak demand or scarce supply

    Correct Answer
    D. Firms should buy, rather than make, in general, because market firms are subject to the discipline of the market and must be efficient and innovative to survive
    Explanation
    The correct answer suggests that firms should buy, rather than make, in general, because market firms are subject to the discipline of the market and must be efficient and innovative to survive. This means that by buying the product or service from the market, firms can benefit from the competitive nature of the market, which forces market firms to be efficient and innovative. This can result in better quality products and services at a lower cost for the buying firm.

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  • 7. 

    What is a reason that companies might want to "buy" instead of "make" talent from the market when looking to acquire employees with a particular skill set?

    • A.

      External training methods are better than internal ones

    • B.

      Companies are always willing to pay more for external employees

    • C.

      External training is more advanced (up-to-date) than internal

    • D.

      Scale economies can result in fixed education costs while in house education methods may be more expensive

    • E.

      Externally trained employees are more likely to become better business leaders

    Correct Answer
    D. Scale economies can result in fixed education costs while in house education methods may be more expensive
    Explanation
    Scale economies can result in fixed education costs while in-house education methods may be more expensive. This means that buying talent from the market can be more cost-effective for companies, as they can leverage the existing training programs and resources of external training providers. By purchasing talent, companies can avoid the additional expenses associated with developing and maintaining internal training programs. This allows them to benefit from the economies of scale that external training providers offer, making it a more financially viable option for acquiring employees with specific skill sets.

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  • 8. 

    What is a market firm?

    • A.

      Firm representing a particular industry

    • B.

      Financial firm

    • C.

      Subsidiary of the large parent firm

    • D.

      Large scale firm

    • E.

      An independent outsourcing partner

    Correct Answer
    E. An independent outsourcing partner
    Explanation
    An independent outsourcing partner refers to a company that provides services or resources to another organization, typically in a different location or country. This type of firm is not directly involved in the industry it serves, but rather specializes in offering specific services or expertise to help the client company streamline operations, reduce costs, or enhance efficiency. They are independent entities that work collaboratively with their clients on a contractual basis, often in areas such as IT, customer support, manufacturing, or research and development.

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  • 9. 

    What are agency costs?

    • A.

      Costs of the sales force

    • B.

      Costs associated with slack effort and with the administrative controls to deter it

    • C.

      Costs related to general and administrative expenses

    • D.

      Costs associated with outsourcing and firm functions

    • E.

      Costs attributed to the use of professional service firms

    Correct Answer
    B. Costs associated with slack effort and with the administrative controls to deter it
    Explanation
    Agency costs refer to the expenses incurred by a company in order to prevent and mitigate the potential conflicts of interest between the company's management (the agents) and its shareholders (the principals). These costs arise due to the possibility of managers acting in their own self-interest rather than in the best interest of the shareholders. The costs associated with slack effort and administrative controls to deter it are considered agency costs because they are incurred to ensure that managers are motivated to work diligently and in the best interest of the company's shareholders.

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  • 10. 

    Which of the following issues makes it difficult for to managers to reign in dedicated "cost centers" in a firm?

    • A.

      Costs centers have no dedicated "customer"

    • B.

      Costs centers are easy to judge against market counterparts performing similar functions

    • C.

      Firms are unwillingly to endure the ill will generated by firing unproductive elements in an organization

    • D.

      Firms are always looking to cut costs when they retain an advantage insulting it from the market

    • E.

      Managers of costs centers have significant latitude to complete their jobs

    Correct Answer
    C. Firms are unwillingly to endure the ill will generated by firing unproductive elements in an organization
    Explanation
    Firms are unwilling to endure the ill will generated by firing unproductive elements in an organization. This means that managers are hesitant to take action against unproductive employees in cost centers because it may create negative feelings and resentment within the organization. This makes it difficult for managers to effectively control and manage cost centers, as they may be reluctant to make necessary changes and remove unproductive elements.

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  • 11. 

    What primary agency cost problem plagued the partnership between Sony's hardware and software from 1998-2008 with regards to digital music?

    • A.

      High infrastructure costs

    • B.

      Contract disputes

    • C.

      High transaction costs

    • D.

      Overlapping distribution channels

    • E.

      Manager/worker slacking

    Correct Answer
    E. Manager/worker slacking
    Explanation
    During the partnership between Sony's hardware and software from 1998-2008, the primary agency cost problem that plagued them was manager/worker slacking. This means that there was a lack of motivation or effort from the managers and workers involved in the partnership, resulting in decreased productivity and efficiency. This could have led to delays, poor decision-making, and overall hindered the success of the partnership between Sony's hardware and software in the digital music industry.

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  • 12. 

    What are influence costs?

    • A.

      Costs associated with slack effort with the administrative controls to deter it

    • B.

      The cost of activities aimed at affecting the distribution of benefits in an organization

    • C.

      Costs related to the negotiation of external contacts

    • D.

      Costs of recruiting ("buying") outside employees with a particular skill set

    • E.

      The costs of advertising to customers

    Correct Answer
    B. The cost of activities aimed at affecting the distribution of benefits in an organization
    Explanation
    Influence costs refer to the expenses incurred when individuals or groups engage in activities that aim to affect the distribution of benefits within an organization. These costs can arise from efforts to gain power, influence decision-making processes, or manipulate the allocation of resources. Examples of influence costs include lobbying, political campaigns, and networking events. By engaging in such activities, individuals or groups may incur expenses such as hiring consultants, organizing events, or funding advertising campaigns to sway the distribution of benefits in their favor.

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jun 17, 2012
    Quiz Created by
    Orsay
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