跨国公司财务管理基础第五版答案精选.doc

CHAPTER 1 SUGGESTED ANSWERS TO “GENERAL ELECTRIC GLOBALIZES” 1. What advantages does General Electric seek to attain from its international business activities? ANSWER. Aside from gaining access to markets worldwide, GE focuses on taking advantage of its global reach to find less expensive materials abroad and intellectual capital, thereby lowering its cost of designing and manufacturing products. 2. What actions is it taking to gain these advantages from its international activities? ANSWER. GE is acquiring companies abroad, and setting up joint ventures with other foreign companies, to gain their assets and ability to service local customers. It is setting up manufacturing facilities abroad to access lower cost labor and materials and also sourcing more purchases abroad for the same reasons. It also is identifying and hiring engineering and scientific talent from around the world to boost its intellectual capital and is setting up RD facilities where this talent can work. 3. What risks does GE face in its foreign operations? ANSWER. Potential increased risks from global operations include, among other things, currency risks, higher receivables delinquencies and bad debts, delays or cancellation of sales and orders, higher local currency financing costs, and a slowdown in established financial services activities. 4. What profit opportunities for GE can arise out of these risks? ANSWER. New profit opportunities for GE include, among other things, lower costs of goods sourced from countries with weakened currencies, more opportunities for lower cost outsourcing, expansion of industrial and financial services activities through purchases of companies or assets at reduced prices and lower U.S. debt financing costs. SUGGESTED ANSWERS TO “DEMOCRATS TURN PROTECTIONIST” 1. What might explain the candidates’ and Democratic Party’s reversal of position on free trade? Which voting constituencies would be most likely to reject free trade? Why? ANS