Answer: Multinational corporations (MNCs) are defined as firms that engage in some form of international business. As the Sports Export Company sells it products to foreign countries & face to global environment. So, the Sports Exports Company is a multinational corporation.
02. Why are the agency costs lower for Sports Exports Company than for most MNCs?
Answer: The costs of ensuring that managers maximize shareholder wealth (referred to as agency cost) are normally higher for MNCs than the agency cost of Sports Export Company. Agency costs are lower for Sports Export Company simply because the owner and manager are the same. The owner does not have managers who are based in other countries or even in the same country at very early stage.
03. Does Sports Exports Company have any comparative advantage over potential competitors in foreign countries that could produce and sell footballs there?
Answer: Obviously, the Sports Exports Company has a comparative advantage over potential competitors to other foreign countries. By applying an idea of producing low cost football and at the same time selling those items on a wholesale basis was become very successful in the U.S. Market. As the Sports Exports Company are producing the item for a long time, the company will certainly enjoy some benefits like the advantages of being a first mover and at the same time will be able to build a rapport with customers. The Sports Exports Company will be the first firm to benefit from the popularity. The potential competitors initially will not get the advantages of becoming a first mover and enough market shares. Also, the Sports Exports Company has a comparative advantage over the U.S. firms that produce the top-of-the-line footballs in the U.S. market and it also sells the footballs at a low price.
04. How would Jim Logan decide in which foreign markets he would attempt to...