Business

FDI is risky because of the problems associated with: A. sharing a va

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 […]

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Date: September 3rd, 2020

Which of the following is one of the limitations of exporting that lea

QUESTION Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting? A. The presence or threat of trade barriers B. The costs of acquiring a foreign enterprise C. The costs of establishing production facilities in a foreign country D. The risk of giving away valuable technological […]

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Date: September 3rd, 2020

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

QUESTION A firm will favor FDI over exporting as an entry strategy when: 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 […]

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Date: September 3rd, 2020

The viability of an exporting strategy is often constrained by transpo

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

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Date: September 3rd, 2020

The argument that firms prefer FDI over licensing to retain control ov

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

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Date: September 3rd, 2020

Which of the following statements is true regarding foreign direct inv

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, […]

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Date: September 3rd, 2020