Question 1 : Benefits and Risks of International Business

As an overall review of this chapter, identify possible reasons for growth in international business. Then, list the various disadvantages that may discourage international business.

Question : 2 Centralization and Agency Costs

Would the agency problem be more pronounced for Berkely Corp., whose parent company makes most major decisions for its foreign subsidiaries, or Oakland Corp., which uses a decentralized approach?

Question : 3 Exposure to Exchange Rates

McCanna Corp., a U.S. firm, has a French subsidiary that produces wine and exports to various European countries. All of the countries where it sells its wine use the euro as their currency, which is the same currency used in France. Is McCanna Corp. exposed to exchange rate risk.

Question : 4 Impact of Political Risk

Explain why political risk may discourage international business.