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
Date: September 3rd, 2020
QUESTION Which of the following involves granting a foreign entity the right to produce and sell the firm’s product in return for a royalty fee on every unit sold? A. Outsourcing B. Exporting C. Licensing D. Diverging E. Hedging ANSWER C
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
QUESTION Which of the following products has a low value-to-weight ratio? A. Electronic components B. Personal computers C. Medical equipment D. Computer software E. Cement ANSWER E
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
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
Date: September 3rd, 2020
QUESTION Governments impose quotas to limit: A. FDI. B. importing. C. franchising. D. outsourcing. E. licensing. ANSWER B
Date: September 3rd, 2020
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
Date: September 3rd, 2020
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, […]
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
