Question 1

3M,an American firm,produces adhesive tape in St.Paul,Minnesota,and ships the tape to South Korea to be sold.This is an example of:

Accepted Answer

A)  exporting.
B)  licensing.
C)  franchising.
D)  globally dispersed production.E) C) and D)
F) All of the above

Question 2

Offering subsidies to foreign MNEs in the form of tax breaks or grants is one way of:

Accepted Answer

A)  adopting a retaliatory stance in bilateral trade.
B)  courting FDI believed to be in national interest.
C)  adopting a radical stance to FDI.
D)  blocking FDI inflows into the country.E) A) and B)
F) None of the above B

Question 3

According to the text,a firm will favor FDI over exporting as an entry strategy when:

Accepted Answer

A)  the costs of establishing production facilities are high.
B)  the transportation costs or trade barriers are high.
C)  there are problems associated with doing business in a different culture.
D)  products with a high value-to-weight ratio are involveD.E) C) and D)
F) B) and C)

Question 4

Countries such as the U.S. ,the U.K. ,France,Germany,the Netherlands,and Japan dominate in the share of total global stock of FDI and FDI outflows and in rankings of the world's largest multinationals because:

Accepted Answer

A)  they were the most developed countries postwar and home to the largest and best-capitalized enterprises.
B)  they pursued a policy of blocking or restricting FDI inflow into their own economies.
C)  they provided subsidies for their domestic firms to protect them from foreign competition.
D)  they control much of the operating structure of the WTO which governs international trade.E) A) and B)
F) A) and C)

Question 5

When contemplating FDI,why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?

Accepted Answer

There are several factors that dictate t...

Question 6

What are the types of industries for which licensing is not a good option?

Accepted Answer

Firms for which licensing is not a good ...

Question 7

As of 2009,2676 bilateral trade treaties involved more than 180 countries,a 12-fold increase from the 181 treaties that existed in 1980.These statistics prove that:

Accepted Answer

A)  governments are increasingly facilitating FDI to protect and promote investment with other countries.
B)  more governments are erecting restrictive trade barriers focused on extractive industries,such as oil and gas.
C)  government intervention in the process of foreign direct investment has hindered economic growth over the past 30 years.
D)  the increasing red-tape involved in conducting international trade between any two countries has created frictions.E) A) and B)
F) B) and C)

Question 8

What has been the role of international organizations in the liberalization of FDI?

Accepted Answer

Until the 1990s,there was no consistent ...

Question 9

_____ summarizes the total amount of capital invested in factories,stores,office buildings,and the like.

Accepted Answer

A)  Gross fixed capital formation
B)  Gross foreign direct investment
C)  Net overhead investment
D)  Net infrastructure investmentE) A) and D)
F) A) and B)

Question 10

The viability of an exporting strategy is often constrained by transportation costs,particularly of products that have a _____ and that can be produced in almost any location.

Accepted Answer

A)  high local content requirement
B)  low total landed cost
C)  low value-to-weight ratio
D)  low licensing tariffE) A) and B)
F) All of the above

Question 11

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 12

A critical competitive feature of an oligopoly is the independence of the major players.

Accepted Answer

A) True 
 B)False

Question 13

The radical view propounds the idea that multinational enterprises (MNEs) that already exist in a country should be immediately ______.

Accepted Answer

A)  nationalized
B)  derecognized
C)  illegalized
D)  expatriatedE) A) and D)
F) A) and C)

Question 14

FDI was governed by the GATT until the 1990s.

Accepted Answer

A) True 
 B)False

Question 15

The _____ view argues that international production should be distributed among countries according to the theory of comparative advantage.

Accepted Answer

A)  conservative
B)  pragmatic nationalism
C)  free market
D)  radicalE) A) and C)
F) B) and C)

Question 16

When a firm exports,it need not bear the costs associated with FDI,and it can reduce the risks associated with selling abroad by using a native sales agent.Exporting,however,is not without its limitations.Discuss the most common limitations of exporting as compared to FDI.

Accepted Answer

The viability of an exporting strategy i...

Question 17

A critical competitive feature of oligopolistic industries is the _____ of the major players.

Accepted Answer

A)  lack of interaction
B)  collaboration
C)  cooperation
D)  interdependenceE) C) and D)
F) All of the above D

Question 18

Direct effects of FDI on employment in the host country arise when a foreign MNE:

Accepted Answer

A)  brings in managers trained in the latest management techniques from the home country.
B)  creates jobs because of increased local spending by employees of the MNE.
C)  employs a number of host country citizens.
D)  causes local suppliers to hire more people.E) C) and D)
F) None of the above C

Question 19

Greenfield investment involves the establishment of a new operation in a foreign country.

Accepted Answer

A) True 
 B)False

Question 20

Briefly explain the two most common types of control exercised by host-governments to restrict the inward flow of FDI.

Accepted Answer

Host governments use a wide range of con...

Exam 7: Foreign Direct Investment

3M,an American firm,produces adhesive tape in St.Paul,Minnesota,and ships the tape to South Korea to be sold.This is an example of:

Correct AnswerverifiedShow Answer

Offering subsidies to foreign MNEs in the form of tax breaks or grants is one way of:

Correct AnswerverifiedB

According to the text,a firm will favor FDI over exporting as an entry strategy when:

Correct AnswerverifiedShow Answer

Countries such as the U.S. ,the U.K. ,France,Germany,the Netherlands,and Japan dominate in the share of total global stock of FDI and FDI outflows and in rankings of the world's largest multinationals because:

Correct AnswerverifiedShow Answer

When contemplating FDI,why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?

Correct AnswerverifiedThere are several factors that dictate t...View AnswerShow Answer

What are the types of industries for which licensing is not a good option?

Correct AnswerverifiedFirms for which licensing is not a good ...View AnswerShow Answer

As of 2009,2676 bilateral trade treaties involved more than 180 countries,a 12-fold increase from the 181 treaties that existed in 1980.These statistics prove that:

Correct AnswerverifiedShow Answer

What has been the role of international organizations in the liberalization of FDI?

Correct AnswerverifiedUntil the 1990s,there was no consistent ...View AnswerShow Answer

_____ summarizes the total amount of capital invested in factories,stores,office buildings,and the like.

Correct AnswerverifiedShow Answer

The viability of an exporting strategy is often constrained by transportation costs,particularly of products that have a _____ and that can be produced in almost any location.

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

A critical competitive feature of an oligopoly is the independence of the major players.

Correct AnswerverifiedShow Answer

The radical view propounds the idea that multinational enterprises (MNEs) that already exist in a country should be immediately ______.

Correct AnswerverifiedShow Answer

FDI was governed by the GATT until the 1990s.

Correct AnswerverifiedShow Answer

The _____ view argues that international production should be distributed among countries according to the theory of comparative advantage.

Correct AnswerverifiedShow Answer

When a firm exports,it need not bear the costs associated with FDI,and it can reduce the risks associated with selling abroad by using a native sales agent.Exporting,however,is not without its limitations.Discuss the most common limitations of exporting as compared to FDI.

Correct AnswerverifiedThe viability of an exporting strategy i...View AnswerShow Answer

A critical competitive feature of oligopolistic industries is the _____ of the major players.

Correct AnswerverifiedD

Direct effects of FDI on employment in the host country arise when a foreign MNE:

Correct AnswerverifiedC

Greenfield investment involves the establishment of a new operation in a foreign country.

Correct AnswerverifiedShow Answer

Briefly explain the two most common types of control exercised by host-governments to restrict the inward flow of FDI.

Correct AnswerverifiedHost governments use a wide range of con...View AnswerShow Answer

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There are several factors that dictate t...
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Firms for which licensing is not a good ...
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Until the 1990s,there was no consistent ...
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FDI is expensive because a firm must bea...
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The viability of an exporting strategy i...
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Host governments use a wide range of con...
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