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Exam 6: Investing Abroad Directly

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Question 21

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When one firm enters a foreign country through foreign direct investment (FDI) ,its rivals are likely to follow by undertaking additional FDI in a host country to:

A) make the host country entrepreneur friendly.
B) discover a new market for its goods.
C) acquire location advantages.
D) increase the first mover's location advantages.

E) A) and D)
F) A) and C)

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Question 22

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The free market view on foreign direct investment (FDI) :

A) leads to a win-win situation for both home and host countries.
B) considers FDI as an instrument of imperialism.
C) approves FDI only when its benefits outweigh its costs.
D) states that FDI enables countries to tap into their absolute advantages when unrestricted by government intervention.

E) All of the above
F) C) and D)

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Question 23

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The international trade between two subsidiaries in two countries controlled by the same multinational enterprise (MNE) is called _____.

Picnia Corp.,a leading automobile manufacturing company,assembles its cars in Deltaland,but the components are manufactured in Ristasia.In this scenario,Picnia Corp.has engaged in:

In the context of international investment,foreign portfolio investment (FPI)is an indirect investment.

Bandoy Corp.,a renowned cell phone manufacturing company,decided to engage in international business.So,Bandoy Corp.sold its technology to several multinational enterprises in other countries.This market entry mode is an example of _____.

Folexa is the largest producer of spices in the world,and its location is an added advantage to its business.It is surrounded by six trading countries.Besides,located close to the southern region of the continent,it attracts business from the neighboring continents as well.Such clustering of economic activities is referred to as _____.

Which of the following statements is true of internalization?

Foreign direct investment (FDI)stock is the total accumulation of inbound FDI in a country or outbound FDI from a country.

Which of the following statements is true of the radical view on foreign direct investment (FDI) ?

The quest for location advantages has to fit with a firm's strategic goals.

Which of the following statements is true of direct ownership?

Analyze the process of overcoming market failure through foreign direct investment (FDI).

What are the implications of action when firms consider to engage in foreign direct investment (FDI)?

In licensing,a firm that receives explicit knowledge is not likely to succeed because:

Which of the following is a benefit of FDI for the host country?

A paper company is opening a new branch.In addition to providing the new branch manager and employees with handbooks detailing their jobs,the firm places experienced personal at the new branch for 6 months to teach hands-on skills and share their know-how.In this scenario,the handbooks transfer explicit knowledge,while the experienced personnel insure the acquisition of tacit knowledge.

A non-multinational enterprise (non-MNE)firm can do business abroad by exporting.

Which of the following political views on foreign direct investment (FDI) does not exist in practice?

Location advantage refers to possession and leveraging by a multinational enterprise (MNE)of certain valuable,rare,hard-to-imitate,and organizationally embedded (VRIO)assets overseas.