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

Offshore production refers to FDI undertaken to serve the host market.

QUESTION Offshore production refers to FDI undertaken to serve the host market. Indicate whether the statement is true or false.   ANSWER FALSE International trade theory tells us that home-country concerns about the negative economic effects of offshore production may be misplaced. The term offshore production refers to FDI undertaken to serve the home market.

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Date: September 3rd, 2020

Why has FDI grown more rapidly than world trade? A. The decline in tr

QUESTION Why has FDI grown more rapidly than world trade? A. The decline in trade barriers has erased the fear of protectionist pressures. B. Executives of business firms see FDI as a way of circumventing future trade barriers. C. There has been a general shift toward radical and totalitarian political institutions. D. Privatization has made […]

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Date: September 3rd, 2020