Questions:
1. What advantages does General Electric seek to attain from its international business activities?
2. What actions is it taking to gain these advantages from its international activities?
3. What risks does GE face in its foreign operations?
4. What profit opportunities for GE can arise out of these risks?
1. What are the pros and cons of outsourcing?
2. How does outsourcing affect U.S. consumers? U.S. producers?
3. Longer term, what is the likely impact of outsourcing on American jobs?
1. What was ARCO Chemical's rationale for globalizing?
2. What advantages has ARCO Chemical realized from its global operations?
3. What threats have arisen from ARCO Chemical's globalizing efforts? What are some ways in which ARCO Chemical has responded to these threats?
4. How has globalization affected, and been affected by, industry consolidation?
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?
5. What leverage do the trade unions have in persuading Al Gore and other Democratic candidates to pay attention to their anti-free -trade position? Explain why these particular unions might be particularly powerful.
6. What trade-offs do Al Gore and other Democrats face in accommodating labor? Explain.
7. How can U.S. manufacturers compete with foreign producers? Are they doomed, as suggested by the president of the United Steelworkers of America?. Explain.
8. Are the unions and their members right to be concerned about the effects of free -trade policies? What are these effects that they are concerned about? Who would be helped and who would be hurt if the unions got their way on trade? Explain.
1.a. What are the various categories of multinational firms?
b. What is the motivation for international expansion of firms within each category?
2.a. How does foreign competition limit the prices that domestic companies can charge and the wages and benefits that workers can demand?
b. What political solutions can help companies and unions avoid the limitations imposed by foreign competition?
c. Who pays for these political solutions? Explain.
3.a. What factors appear to underlie the Asian currency crisis?
b. What lessons can we learn from the Asian currency crisis?
4.a. What is an efficient market?
b. What is the role of a financial executive in an efficient market?
5.a. What is the capital asset pricing model?
b. What is the basic message of the CAPM?
c. How might a multinational firm use the CAPM?
6. Why might total risk be relevant for a multinational corporation?
7. A memorandum by Labor Secretary Robert Reich to President Clinton suggests that the government penalize U.S. companies that invest overseas rather than at home. According to Reich, this kind of investment hurts exports and destroys well-paying jobs. Comment on this argument.
8.a. Are multinational firms riskier than purely domestic firms?
b. What data would you need to address this question?
9. Is there any reason to believe that MNCs may be less risky than purely domestic firms? Explain.
10. In what ways do financial markets grade government economic policies?
1. In seeking to predict tomorrow's exchange rate, are you better off knowing today's exchange rate or the exchange rates for the past 100 days?
2. Why might setting up production facilities abroad lead to expanded sales in the local market?
3a. How might total risk affect a firm's production costs and its ability to sell? Give some examples of firms in financial distress that saw their sales drop.
b. What is the relation between the effects of total risk on a firm's sales and costs and its desire to hedge foreign exchange risk?