QUESTION Silicon Valley in California is the world center for the computer and semiconductor industry and has many of the world’s major computer and semiconductor companies located close to each other, thus offering the location-specific advantage of: A. a multipoint competition. B. an oligopoly. C. a first mover. D. externalities. E. free riders. ANSWER […]
QUESTION Dunning’s theory helps explain: A. how firms try to match each other’s moves in different markets to try to hold each other in check. B. the interdependence between firms in an oligopoly that leads to imitative behavior among the rivals. C. why a greenfield investment in a new facility is better than an acquisition […]
QUESTION Which of the following is true about Dunning’s arguments? A. Dunning rejects the argument of internalization theory that it is difficult for a firm to license its own unique capabilities and know-how. B. Dunning suggests that to exploit foreign resources, such as oil and other minerals, a firm must undertake licensing rather than FDI. […]
QUESTION Which view of FDI traces its roots to Marxist political and economic theory? A. Radical B. Free market C. Pragmatic nationalism D. Comparative advantage E. Pluralist ANSWER A
QUESTION According to internalization theory, one of the drawbacks of licensing is that: A. it may result in a firm’s technological know-how being restricted to a limited knowledge base and stifles any future development. B. it does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may […]
QUESTION Radical writers argue that: A. a multinational enterprise (MNE) is an instrument of economic development rather than economic domination. B. MNEs are more beneficial to host countries than to their home countries. C. important jobs in the foreign subsidiaries of MNEs go to host-country nationals rather than to citizens of the home country. D. […]
QUESTION A firm is most likely to favor foreign direct investment over exporting when: 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 […]
QUESTION According to the radical view of FDI, multinational enterprises (MNEs) that already exist in a country should be: A. immediately nationalized. B. made to pay higher taxes. C. converted into publicly traded companies. D. banned from obtaining finance from the financial institutions in the host country. E. immediately privatized. ANSWER A
QUESTION Which of the following states that combining location-specific assets or resource endowments and the firm’s own unique assets often requires FDI, and it also requires the firm to establish production facilities where those foreign assets or resource endowments are located? A. Strategic trade policy B. Integration approach C. Scramble theory D. Eclectic paradigm E. […]
QUESTION FDI is risky because of the problems associated with: A. sharing a valuable technological know-how with a potential competitor. B. an increase in transportation costs, especially for those products that have a low value-to-weight ratio. C. doing business in a different culture where the rules of the game may be very different. D. the […]
