What are blocked funds? How can a corporation structure its foreign affiliates to mitigate problems with blocked funds?
What will be an ideal response?
Blocked funds arise when the government of a foreign country makes the nation's currency completely inconvertible. Foreign exchange controls that impose unattractive foreign exchange rates can also constrain a firm. One technique is for the parent to lend to the affiliate with a fronting loan, which is explained in the answer to Question 10 .
If the profits from the local affiliate cannot be repatriated, the local managers should be given the power to invest in any zero net present value investments. These investments include the commercial bonds and the equities of other firms. If none of these investments appear to be attractive, the firm can engage in additional direct investment in the country by purchasing local real estate, either land or buildings. The firm can also pursue other real investments, including commodities, either for export or to add to its existing inventory, or it might construct additional facilities. Another way for a multinational corporation to use its working capital is to have a local affiliate contract with other firms operating in the country to supply goods or to perform services for the parent or its other affiliates. For example, an architectural firm in a country with blocked funds could be hired to design a factory slated to be built by the parent.
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During Lewin's refreezing stage, managers should
A. make employees dissatisfied with the present way of doing things. B. give employees the tools for change. C. provide benchmarking results. D. encourage and reinforce the desired change in the employees. E. reduce the barriers to change.
________ states are more diffuse, less intense, and more enduring than ________ states, which tend to be more intense and directed at more specific targets.
Fill in the blank(s) with the appropriate word(s).
As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why?
A) Transportation and inventory costs first decline steeply, then rise, while facility costs always rise. B) Transportation costs always decline, but eventually the rise in facility and inventory costs outweigh the declining transportation costs. C) Facility costs first decline steeply, then rise, while transportation and inventory costs always rise. D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise. E) Inventory costs first decline steeply, then rise, while transportation and facility costs always rise.
A contract may include a clause stating that damages will be limited to a maximum amount
a. True b. False Indicate whether the statement is true or false