MIB Master of International Business 3

Question 1

Which currency exchange rate system allows a country's currency value to fluctuate freely based on market supply and demand?

Accepted Answer

Free float

Answer

A free float system lets market forces determine currency value without government intervention, as seen with the U.S. dollar, euro, and Japanese yen.

Question 2

A firm's value chain analysis in an international context helps managers identify:

Accepted Answer

Activities where the firm can achieve competitive advantage globally

Answer

Value chain analysis breaks down a firm's activities to identify which can be performed most efficiently or distinctively across global locations to build competitive advantage.

Question 3

When a parent company sets artificially low prices on goods sold to its foreign subsidiaries to reduce overall tax liability, this practice is called:

Accepted Answer

Transfer pricing manipulation

Answer

Transfer pricing manipulation occurs when MNCs set intracompany prices to shift profits to low-tax jurisdictions, a practice heavily scrutinized by tax authorities worldwide.

Question 4

The 'liability of foreignness' concept refers to:

Accepted Answer

The extra costs and disadvantages firms face when operating in unfamiliar foreign markets

Answer

Liability of foreignness describes the inherent competitive disadvantages MNCs face abroad — such as unfamiliarity with local laws, culture, and networks — compared to indigenous competitors.

Question 5

Which of the following best describes a 'born global' firm?

Accepted Answer

A firm that pursues international markets from or near its inception

Answer

Born global firms internationalize rapidly from founding, often driven by technology, niche markets, or founder networks, bypassing the traditional incremental internationalization stages.

MIB - Master of International Business Practice Test

MIB - Master of International Business Practice Test

MIB Master of International Business 3