Question 1

An acquisition does not result in a net increase in the number of players in a market.

Accepted Answer

A) True 
 B)False

Question 2

Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Accepted Answer

Foreign direct investment (FDI) occurs w...

Question 3

FDI can result in a positive contribution to a host economy by supplying capital and technology which boost the country's economy.

Accepted Answer

A) True 
 B)False

Question 4

According to internalization theory, one drawback of licensing is that it might result in a firm giving away technological know-how to a competitor.

Accepted Answer

A) True 
 B)False

Question 5

A country that has the pragmatic nationalism view would agree that foreign direct investment should be allowed as long as

Accepted Answer

A)   both home and host country benefit.
B)   it takes place within a planned economy.
C)   the benefits outweigh the costs.
D)   location-specific advantages are available.
E)   there is evidence of a comparative advantage.F) A) and E)
G) B) and C)

Question 6

Licensing is not a good option if the competitive advantage of a firm is based upon managerial or marketing knowledge that is embedded in the routines of the firm or the skills of its managers, and that is difficult to codify in a "book of blueprints."

Accepted Answer

A) True 
 B)False

Question 7

A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan. This is an example of

Accepted Answer

A)   an absolute advantage.
B)   stock consolidation.
C)   foreign direct investment.
D)   product differentiation.
E)   market segmentation.F) A) and D)
G) C) and D)

Question 8

Explain why FDI has grown more rapidly than world trade and world output.

Accepted Answer

FDI has grown more rapidly than world tr...

Question 9

The ________ of FDI refers to the amount of FDI undertaken over a given period (normally a year) .

Accepted Answer

A)   portfolio
B)   flow
C)   status
D)   stock
E)   fragmentF) B) and D)
G) A) and B)

Question 10

Which situation represents an indirect effect of FDI on employment in a host country?

Accepted Answer

A)   Jasper Inc. is a foreign MNE and employs a number of host-country citizens.
B)   The employees of ShrillPlans Corp. have more money to spend and as a result, more home construction jobs are being created in the country.
C)   DynaDigs brought in managers from the home country for its operations in the host country.
D)   RaceandRoll Corp. recruits people from the host country for research and development.
E)   Mills Rite Inc. sends home country employees to host countries for training.F) A) and C)
G) C) and D)

Question 11

A current account deficit is also known as a(n)  ________ deficit.

Accepted Answer

A)   stock
B)   inventory
C)   external
D)   tariff
E)   tradeF) A) and B)
G) B) and D)

Question 12

Performance requirements are controls over the behavior of the MNE's local subsidiary.

Accepted Answer

A) True 
 B)False

Question 13

Despite its advantages, FDI has been described as an "expensive" and "risky" international growth strategy. Other things being equal, why is FDI expensive and risky when compared to licensing and exporting?

Accepted Answer

FDI is expensive because a firm must bea...

Question 14

Describe the circumstances that lead to a firm favoring foreign direct investment over exporting as an entry strategy.

Accepted Answer

A firm will favor foreign direct investm...

Question 15

QFresh, a brand for energy drinks, launched a healthy lime-based drink without preservatives. Immediately after this, another brand, Fast Fizz, which manufactures energy drinks, also announced the launch of a new refreshing drink without preservatives. Then Ignite, a third brand of energy drinks, reduced the price of its apple-based drink. Which of the following is most likely to happen in this oligopolistic market setup?

Accepted Answer

A)   QFresh and Fast Fizz will reduce the prices of their respective drinks.
B)   Fast Fizz will launch another new drink.
C)   QFresh will link up with Ignite to launch a completely new product.
D)   Fast Fizz and Ignite will collaborate against QFresh.
E)   QFresh will have an increased domestic consumption.F) A) and D)
G) B) and C)

Question 16

The flow of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time.

Accepted Answer

A) True 
 B)False

Question 17

In the context of FDI, compare and contrast the political ideologies of the radical view, the free market view, and pragmatic nationalism.

Accepted Answer

The radical view of FDI traces its roots...

Question 18

A firm is most likely to favor foreign direct investment over exporting when

Accepted Answer

A)   the firm wants its technological know-how to be widely disseminated.
B)   the firm wishes to maintain control over its operations and business strategy.
C)   the transportation costs are low.
D)   there are no trade barriers.
E)   the firm wants to customize its products as per the tastes and preferences of foreign consumers.F) A) and E)
G) A) and B)

Question 19

Compared to the growth in world trade and world output, FDI has

Accepted Answer

A)   grown at about the same rate.
B)   grown more rapidly.
C)   failed to match the growth of world trade.
D)   grown at a slower rate.
E)   remained stagnant.F) B) and E)
G) C) and D)

Question 20

Internalization theory promotes the idea that

Accepted Answer

A)   licensing gives a firm tight control over manufacturing, marketing, and strategy in a foreign country.
B)   licensing may result in a firm giving away valuable technological know-how to a potential foreign competitor.
C)   licensing has no major drawbacks as a strategy for exploiting foreign market opportunities.
D)   a problem with licensing arises when the firm's competitive advantage is based on its products rather than on the manufacturing capabilities that produce those products.
E)   licensing is always more profitable than FDI.F) B) and D)
G) C) and D)

Exam 8: Foreign Direct Investment

FDI can result in a positive contribution to a host economy by supplying capital and technology which boost the country's economy.

Correct Answer
verified

A country that has the pragmatic nationalism view would agree that foreign direct investment should be allowed as long as

Correct Answer
verified

Explain why FDI has grown more rapidly than world trade and world output.

Correct Answer
verified
FDI has grown more rapidly than world tr...
View Answer

According to internalization theory, one drawback of licensing is that it might result in a firm giving away technological know-how to a competitor.

Correct Answer
verified

Compared to the growth in world trade and world output, FDI has

Correct Answer
verified

Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Correct Answer
verified
Foreign direct investment (FDI) occurs w...
View Answer

A firm is most likely to favor foreign direct investment over exporting when

Correct Answer
verified

An acquisition does not result in a net increase in the number of players in a market.

Correct Answer
verified

A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan. This is an example of

Correct Answer
verified

A current account deficit is also known as a(n) ________ deficit.

Correct Answer
verified

Which situation represents an indirect effect of FDI on employment in a host country?

Correct Answer
verified

Despite its advantages, FDI has been described as an "expensive" and "risky" international growth strategy. Other things being equal, why is FDI expensive and risky when compared to licensing and exporting?

Correct Answer
verified
FDI is expensive because a firm must bea...
View Answer

Licensing is not a good option if the competitive advantage of a firm is based upon managerial or marketing knowledge that is embedded in the routines of the firm or the skills of its managers, and that is difficult to codify in a "book of blueprints."

Correct Answer
verified

Correct Answer
verified

In the context of FDI, compare and contrast the political ideologies of the radical view, the free market view, and pragmatic nationalism.

Correct Answer
verified
The radical view of FDI traces its roots...
View Answer

Describe the circumstances that lead to a firm favoring foreign direct investment over exporting as an entry strategy.

Correct Answer
verified
A firm will favor foreign direct investm...
View Answer

Internalization theory promotes the idea that

Correct Answer
verified

Performance requirements are controls over the behavior of the MNE's local subsidiary.

Correct Answer
verified

The ________ of FDI refers to the amount of FDI undertaken over a given period (normally a year) .

Correct Answer
verified

The flow of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time.

Correct Answer
verified

Exam 8: Foreign Direct Investment

FDI can result in a positive contribution to a host economy by supplying capital and technology which boost the country's economy.

Correct AnswerverifiedShow Answer

A country that has the pragmatic nationalism view would agree that foreign direct investment should be allowed as long as

Correct AnswerverifiedShow Answer

Explain why FDI has grown more rapidly than world trade and world output.

Correct AnswerverifiedFDI has grown more rapidly than world tr...View AnswerShow Answer

According to internalization theory, one drawback of licensing is that it might result in a firm giving away technological know-how to a competitor.

Correct AnswerverifiedShow Answer

Compared to the growth in world trade and world output, FDI has

Correct AnswerverifiedShow Answer

Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Correct AnswerverifiedForeign direct investment (FDI) occurs w...View AnswerShow Answer

A firm is most likely to favor foreign direct investment over exporting when

Correct AnswerverifiedShow Answer

An acquisition does not result in a net increase in the number of players in a market.

Correct AnswerverifiedShow Answer

A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan. This is an example of

Correct AnswerverifiedShow Answer

A current account deficit is also known as a(n) ________ deficit.

Correct AnswerverifiedShow Answer

Which situation represents an indirect effect of FDI on employment in a host country?

Correct AnswerverifiedShow Answer

Despite its advantages, FDI has been described as an "expensive" and "risky" international growth strategy. Other things being equal, why is FDI expensive and risky when compared to licensing and exporting?

Correct AnswerverifiedFDI is expensive because a firm must bea...View AnswerShow Answer

Licensing is not a good option if the competitive advantage of a firm is based upon managerial or marketing knowledge that is embedded in the routines of the firm or the skills of its managers, and that is difficult to codify in a "book of blueprints."

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the context of FDI, compare and contrast the political ideologies of the radical view, the free market view, and pragmatic nationalism.

Correct AnswerverifiedThe radical view of FDI traces its roots...View AnswerShow Answer

Describe the circumstances that lead to a firm favoring foreign direct investment over exporting as an entry strategy.

Correct AnswerverifiedA firm will favor foreign direct investm...View AnswerShow Answer

Internalization theory promotes the idea that

Correct AnswerverifiedShow Answer

Performance requirements are controls over the behavior of the MNE's local subsidiary.

Correct AnswerverifiedShow Answer

The ________ of FDI refers to the amount of FDI undertaken over a given period (normally a year) .

Correct AnswerverifiedShow Answer

The flow of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
FDI has grown more rapidly than world tr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Foreign direct investment (FDI) occurs w...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
FDI is expensive because a firm must bea...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The radical view of FDI traces its roots...
View Answer

Correct Answer
verified
A firm will favor foreign direct investm...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified