Multiple Choice Questions (30) 1/ By the late 90\'s Korea had become accustomed

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Multiple Choice Questions (30) 1/ By the late 90's Korea had become accustomed to an ever expanding economy, their large industrial conglomerates or Chaebols continued to invest huge amounts of capital borrowed in Eurodollars which charged low rates, this caused: a/ overinvestment in production capacity causing prices to plunge, Chaebols having difficulty repaying the loans and the Korean currency to loose value. b/ the Korean government to subsidize these loans at the expense of the Korean taxpayers. e/ the Korean banks to refinance many of the Eurodollar loans the Chaebols made in the London market. d/ all of the above. 2/ Firms that focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies, pursue a a/ international strategy b/ global standardization strategy c/ localization strategy d/ transnational strategy 3/ An effective incentive system needs to have the following characteristics: al it has to make sure the incentive scheme is linked to an output target the employee has some control over and/or can influence. b/ the incentive systems in multinational companies have to be adjusted to account for national differences in institutions and culture. c/ managers need to carefully think thru exactly what behavior certain incentives encourage. d/ all of the above. 4/ The reason(s) international acquisitions fail is/are: a/ the acquiring firm often overpays for the assets of the acquired firm b/ integration of the operations often run into roadblocks and take much longer than forecast. c/ because cultures of the acquiring and acquired firms clash d/ all the above 5/ The characteristic(s) of countertrade currently are/is: al it is practiced primarily in the communist countries of Eastern Europe. b/ the Japanese giant trading firms (sogo shosha) are masters of countertrade c/ companies generally prefer it over letter of credit transactions d/all of the above

Explanation / Answer

1. The right answer is Option D.

Explanation: In 1997, Korea faced a major financial crisis, along with many other Asian nations like Thailand, Indonesia, Philippines, Hong Kong, Malaysia, Mongolia, and Singapore. This event is known as the Asian financial crisis. In Korea, overinvestment and capacity developments in industrial conglomerates (known as Chaebols) led to falling in price, which led to the bankruptcy of many conglomerates. This led to the fall in the value of the Korean currency. The government jumped to bail out the conglomerates using taxpaers' money. The Korean banks faced rising NPAs and they refinanced many loans extended to the conglomerates.

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