Why do companies go global? Multinational corporations operate in locations across the world. Each company has its own motive for its presence in different countries. Consider the following case: Salty Lemon Manufacturers is an American company that produces high-tech electronics. Its managers have decided to move some of its production facilities to Japan in an attempt to circumvent certain governmental regulations. Which of the following best describes the reason Salty Lemon Manufacturers has decided to go global? To avoid political, trade, and regulatory hurdles To broaden its markets To seek production efficiency Now consider the case of Blue Box Crate Company, which has decided to establish worldwide production facilities and markets to cushion itself from adverse economic conditions in any particular country. Blue Box Crate Company has decided to go global in order to Companies go global for various reasons. Although becoming a multinational corporation provides prospects for high returns and diversification, it makes financial management more complicated for financial executives and managers. Based on your understanding of the factors that complicate financial management in multinational firms, complete the following statement: Compared to domestic corporations, multinational corporations have exposure to risks that arise from complex tax laws and multiple money markets.
Why do companies go global? Multinational corporations operate in locations across the world. Each company has its own motive for its presence in different countries. Consider the following case: Salty Lemon Manufacturers is an American company that produces high-tech electronics. Its managers have decided to move some of its production facilities to Japan in an attempt to circumvent certain governmental regulations. Which of the following best describes the reason Salty Lemon Manufacturers has decided to go global? To avoid political, trade, and regulatory hurdles To broaden its markets To seek production efficiency Now consider the case of Blue Box Crate Company, which has decided to establish worldwide production facilities and markets to cushion itself from adverse economic conditions in any particular country. Blue Box Crate Company has decided to go global in order to Companies go global for various reasons. Although becoming a multinational corporation provides prospects for high returns and diversification, it makes financial management more complicated for financial executives and managers. Based on your understanding of the factors that complicate financial management in multinational firms, complete the following statement: Compared to domestic corporations, multinational corporations have exposure to risks that arise from complex tax laws and multiple money markets.
Chapter16: Country Risk Analysis
Section: Chapter Questions
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Transcribed Image Text:Why do companies go global?
Multinational corporations operate in locations across the world. Each company has its own motive for its presence in
different countries.
Consider the following case:
Salty Lemon Manufacturers is an American company that produces high-tech electronics. Its managers have decided
to move some of its production facilities to Japan in an attempt to circumvent certain governmental regulations.
Which of the following best describes the reason Salty Lemon Manufacturers has decided to go global?
To avoid political, trade, and regulatory hurdles
To broaden its markets
To seek production efficiency
Now consider the case of Blue Box Crate Company, which has decided to establish worldwide production facilities and
markets to cushion itself from
adverse economic conditions in any particular country. Blue Box Crate Company has
decided to go global in order to
Companies go global for various reasons. Although becoming a multinational corporation provides prospects for high
returns and diversification, it makes financial management more complicated for financial executives and managers.
Based on your understanding of the factors that complicate financial management in multinational firms, complete
the following statement:
Compared to domestic corporations, multinational corporations have
exposure to risks that arise from
complex tax laws and multiple money markets.
Transcribed Image Text:Companies go global for various reasons. Although becoming a multinational corporation provides prospects for high
returns and diversification, it makes financial management more complicated for financial executives and managers.
Based on your understanding of the factors that complicate financial management in multinational firms, complete
the following statement:
Compared to domestic corporations, multinational corporations have
exposure to risks that arise from
complex tax laws and multiple money markets.
Multinational versus domestic financial management
According to the Bureau of Economic Analysis, the growth of capital expenses made by U.S. companies
internationally was higher than the growth of investments made in domestic U.S. markets ("Summary Estimates for
Multinational Companies: Employment, Sales, and Capital Expenditures for 2010," http://www.bea.gov/
newsreleases/international/mnc/2012/mnc2010.htm). While these companies might follow similar processes and
concepts, their financial management tactics distinguish firms that operate domestically only and firms that have
international operations.
Based on your understanding of the how these firms differ, identify which of the following are factors that affect
multinational firms. Check all that apply.
X Language differences that make communication challenging among employees and managers
Different currency denominations and exchange rates that affect the value of transactions
Universal business language used in all subsidiaries
Uniform global currency used in transactions
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