Question

Because multinational corporations operate in countries with different languages, different cultures, different political environments, and different economic conditions, _____.

Answer 1

Answer: E. the firms should manage the working capital accounts of their foreign subsidiaries the same as the foreign firms in the countries where their subsidiaries are located manage their working capital accounts

Explanation:

The options include:

a. the management of their working capital accounts is not at all similar to the management of working capital accounts in purely domestic firms.

b. their decisions regarding the management of their working capital accounts are concerned with short-run survival only because the firms don't know how long they will be able to operate in the foreign countries before the host governments expropriate their properties.

c. their decisions regarding the management of their working capital accounts often significantly affect their abilities to survive in the long-run.

d. the management of their working capital accounts is much simpler than in purely domestic firms.

e. the firms should manage the working capital accounts of their foreign subsidiaries the same as the foreign firms in the countries where their subsidiaries are located manage their working capital accounts.

A multinational corporation is an organization that produces goods or renders services in different countries apart from its home country.

Due to the different languages, political environment, culture, and different economic conditions, it is necessary for the corporation to manage the working capital accounts of their foreign subsidiaries the same as the foreign firms in the countries where their subsidiaries are located manage their working capital accounts. This is to ensure that there is uniformity across all level and to cut away discrepancies that might ensure. Even though a multinational corporation is situated in different countries, their goals must always align together.