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 The interdependence between firms in an oligopoly leads to: A. trade wars. B. a decrease in the supply. C. imitative behavior. D. higher demand. E. increased domestic consumption. ANSWER C
QUESTION Which of the following is a reason for the decline in the popularity of the radical view of FDI? A. The rise of communism in Eastern Europe B. The generally steady economic growth of those countries that embraced the radical position C. The growing belief in many countries that FDI leads to loss of […]
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 […]
QUESTION 3M, an American firm, manufactures adhesive tapes in St. Paul, Minnesota, and ships the tapes to South Korea for sale. According to this information, which of the following is being done by 3M? A. Exporting B. Licensing C. Franchising D. Insourcing E. Outsourcing ANSWER A
