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Question 1 (a) The agency problems occurred because the subsidiary's management goals were not focused on maximizing shareholder wealth. Define agency problem and explain THREE
Question 1 (a) "The agency problems occurred because the subsidiary's management goals were not focused on maximizing shareholder wealth". Define agency problem and explain THREE (3) reason of agency cost for an Multinational Companies (MNC) is larger than pure domestic firm. (7 marks) (b) "Multinational Companies (MNC)'s can capitalize on comparative advantages such as technology or cost of labor that they have relative to firms in other countries, which allows them to penetrate those other countries markets". Explain how the theory of comparative advantage relates to the need for international business. (8 marks)
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