QUESTION The viability of an exporting strategy is often constrained by transportation costs, particularly of products that can be produced in almost any location and have a: A. high local content requirement. B. low total landed cost. C. low value-to-weight ratio. D. low licensing tariff. E. high marginal cost. ANSWER C
QUESTION Governments impose quotas to limit: A. FDI. B. importing. C. franchising. D. outsourcing. E. licensing. ANSWER B
QUESTION The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the: A. comparative advantage theory. B. distribution theory. C. new trade theory. D. internalization theory. E. licensing theory. ANSWER D
QUESTION Which of the following statements is true regarding foreign direct investment? A. The flow of FDI refers to the total accumulated value of foreign-owned assets at a given time. B. FDI has grown more rapidly than world trade and world output. C. The general shift toward democratic political institutions has discouraged FDI. D. Generally, […]
QUESTION According to internalization theory: A. licensing gives a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability. B. licensing may result in a firm’s giving away valuable technological know-how to a potential foreign competitor. C. licensing has no major drawbacks as a […]
QUESTION Mergers and acquisitions differ from greenfield investments in that: 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 […]
QUESTION A firm that does not want to bear the costs of establishing production facilities in a foreign country should avoid: A. exporting. B. FDI. C. licensing. D. franchising. E. outsourcing. ANSWER B
QUESTION Countries such as the United States, the United Kingdom, 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 they: A. were the most developed countries postwar and home to the largest and best capitalized enterprises. […]
QUESTION The market imperfections approach seeks to explain: A. the disadvantages associated with the adoption of a completely free market view. B. why different nations import goods from other countries even when they are more capable of producing them efficiently. C. the preference for FDI over licensing by firms as a strategy to enter foreign […]
QUESTION The United States has been an attractive target for FDI partly because of its: A. abundance of cheap and skilled labor. B. stable and dynamic economy. C. commitment to environmental issues. D. low corporate tax rates. E. high trade barriers. ANSWER B
