Question 1

According to the radical view,which of the following countries would benefit the most from FDI?

Accepted Answer

A)   Host countries of MNEs
B)   Third world countries
C)   Less developed FDI destinations
D)   Advanced, capitalist home countries of MNEs
E)   Underdeveloped countriesF) A) and B)
G) C) and D)

Question 2

The attractiveness of exporting increases in comparison to FDI or licensing when products have a low value-to-weight ratio.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?

Accepted Answer

A)   Outsourcing
B)   Exporting
C)   Licensing
D)   Diverging
E)   HedgingF) A) and B)
G) C) and D)

Question 4

_____ accounts are national accounts that track both payments to and receipts from other countries.

Accepted Answer

A)   Equity
B)   Dematerialized
C)   Balance of trade
D)   Asset
E)   Balance-of-paymentsF) C) and D)
G) B) and E)

Question 5

By placing tariffs on imported goods,governments can increase the cost of exporting relative to foreign direct investment and licensing.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Greenfield investments are quicker to execute than mergers and acquisitions.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

The radical view of FDI traces its views...

Question 9

Which of the following is true regarding the inflow of FDI?

Accepted Answer

A)   Even though developing nations still account for the largest share of FDI inflows, FDI into underdeveloped nations has increased markedly.
B)   Africa has historically been the largest recipient of inward FDI.
C)   The United Kingdom and France have historically been the smallest recipients of inward FDI.
D)   There has been an increase in the importance of China as a recipient of FDI.
E)   Latin America is the least important region in the developing world for FDI inflows.F) B) and C)
G) A) and E)

Question 10

Franchising is essentially the service-industry version of licensing,although it normally involves much longer-term commitments than licensing.

Accepted Answer

A) True 
 B)False

Question 11

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)   they were the governing body of the International Monetary Fund.F) A) and C)
G) B) and D)

Question 12

Although it normally involves much longer-term commitments,franchising is essentially the service industry version of:

Accepted Answer

A)   exporting.
B)   licensing.
C)   foreign direct investment.
D)   greenfield investment.
E)   diversifying.F) B) and E)
G) A) and E)

Question 13

Since World War II,the United States has been the largest source country for FDI,a position it retained during the late 1990s and early 2000s.

Accepted Answer

A) True 
 B)False

Question 14

"Firms prefer to acquire existing assets rather than undertake greenfield investments while contemplating FDI." Explain the reasons that support this argument.

Accepted Answer

There are several factors that dictate t...

Question 15

Mergers and acquisitions differ from greenfield investments in that:

Accepted Answer

A)   greenfield investments are quicker to execute than mergers and acquisitions.
B)   greenfield investments are undertaken to take advantage of valuable strategic assets, such as brand loyalty and trademarks or patents, of a foreign competitor.
C)   the majority of FDI flows into developed nations are in the form of greenfield investments rather than mergers and acquisitions.
D)   the majority of FDI flows into developing nations is in the form of cross-border mergers and acquisitions.
E)   the percentage of mergers and acquisitions is lower than greenfield investments in developing nations.F) A) and B)
G) B) and E)

Question 16

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)   the products involved have a high value-to-weight ratio.
E)   the firm wants to occupy a position that falls inside the efficiency frontier.F) A) and B)
G) A) and C)

Question 17

How can governments restrict the outward flow of FDI?

Accepted Answer

Virtually all investor countries,includi...

Question 18

What is meant by the term foreign direct investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Accepted Answer

Foreign direct investment (FDI)occurs wh...

Question 19

Which of the following is a home-country policy for limiting outward FDI?

Accepted Answer

A)   Eliminating double taxation of foreign income
B)   Manipulating tax rules to encourage the firms to invest at home
C)   Withdrawing government-backed insurance programs provided to local investors
D)   Reducing interest rates earned on domestic investments
E)   Prohibiting organizations from entering into a cartelF) B) and D)
G) A) and B)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 8: Foreign Direct Investment

Franchising is essentially the service-industry version of licensing,although it normally involves much longer-term commitments than licensing.

Correct AnswerverifiedShow Answer

Greenfield investments are quicker to execute than mergers and acquisitions.

Correct AnswerverifiedShow Answer

Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?

Correct AnswerverifiedShow Answer

A firm will favor FDI over exporting as an entry strategy when:

Correct AnswerverifiedShow Answer

"Firms prefer to acquire existing assets rather than undertake greenfield investments while contemplating FDI." Explain the reasons that support this argument.

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

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

Correct AnswerverifiedShow Answer

Which of the following is a home-country policy for limiting outward FDI?

Correct AnswerverifiedShow Answer

Mergers and acquisitions differ from greenfield investments in that:

Correct AnswerverifiedShow Answer

_____ accounts are national accounts that track both payments to and receipts from other countries.

Correct AnswerverifiedShow Answer

According to the radical view,which of the following countries would benefit the most from FDI?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Although it normally involves much longer-term commitments,franchising is essentially the service industry version of:

Correct AnswerverifiedShow Answer

How can governments restrict the outward flow of FDI?

Correct AnswerverifiedVirtually all investor countries,includi...View AnswerShow Answer

What is meant by the term foreign direct investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

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

The attractiveness of exporting increases in comparison to FDI or licensing when products have a low value-to-weight ratio.

Correct AnswerverifiedShow Answer

By placing tariffs on imported goods,governments can increase the cost of exporting relative to foreign direct investment and licensing.

Correct AnswerverifiedShow Answer

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

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

Which of the following is true regarding the inflow of FDI?

Correct AnswerverifiedShow Answer

Since World War II,the United States has been the largest source country for FDI,a position it retained during the late 1990s and early 2000s.

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

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There are several factors that dictate t...
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Virtually all investor countries,includi...
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Foreign direct investment (FDI)occurs wh...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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The radical view of FDI traces its views...
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Correct Answer
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Correct Answer
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