Page 20 - DMGT549_INTERNATIONAL_FINANCIAL_MANAGEMENT

Unit 1: Financial Management in Global Context

Franchising: Franchising means, a firm in one country authorizing a firm in another country to Notes
utilise its brand names, logos etc. for some royalty payment.
Globalisation: Globalisation increases the ability of firms to do business across national
boundaries.
Joint Venture: Joint venture means a corporate entity or partnership that is jointly owned and
operated by two or more firms.
Licensing: The granting of permission to use intellectual property rights, such as trademarks,
patents, or technology, under defined conditions.

Management Contracts: A firms in one country agrees to operate facilities or provide other
management services to a firm in another country for an agreed upon fee.
Political Risk: Political risk ranges from the risk of loss (or gain) from unforeseen government
actions or other events of a political character such as acts of terrorism to outright expropriation
of assets held by foreigners.

1.8 Review Questions

1. What factors cause some firms to become more internationalised than others?
2. Describe the constraints that interfere with the MNC’s objective.
3. Briefly describe the motivations for International Business.
4. “Because of its broad global environment, a number of disciplines (geography, history,
political science, etc.) are useful to help explain the conduct of International Business.”
Elucidate with examples.

5. “The conflict between the MNCs and their environment is real and frequently very intense.”
Discuss.
6. Discuss the distinguishing features of international finance.

7. Explain the possible reasons for growth in international business.
8. “Globalization has made a tremendous impact throughout the world in past few years.
There are various reasons involved in this progression.’ Elaborate and discuss the reasons.

9. Do you think MNCs have greater flexibility than domestic firms in the location and
timing of their investments? Elucidate.
10. ‘The job of a manager of a MNC is both challenging and risky.’ Comment.

Answers: Self Assessment

1. True 2. False

3. False 4. True
5. False 6. False
7. True 8. Foreign Direct Investments (FDI)
9. Comparative 10. Risk
11. False 12. False

13. True 14. Sources
15. Efficiency

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