QUESTION Which of the following is true regarding the inflow of FDI? A. Even though developing nations still account for the largest share of FDI inflows, FDI into developed nations has increased markedly. B. Africa has historically been the largest recipient of inward FDI. C. The United Kingdom and France have historically been the smallest […]
QUESTION Which of the following involves producing goods at home and then shipping them to the receiving country for sale? A. Outsourcing B. Licensing C. Franchising D. Exporting E. Diversifying ANSWER D
QUESTION Which of the following states that combining location-specific assets or resource endowments and the firm’s own unique assets often requires FDI, and it also requires the firm to establish production facilities where those foreign assets or resource endowments are located? A. Strategic trade policy B. Integration approach C. Scramble theory D. Eclectic paradigm E. […]
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
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
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 […]
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
QUESTION Services such as telecommunications, retailing, and many financial services, where the service has to be produced where it is delivered, lend themselves well to exporting. Indicate whether the statement is true or false. ANSWER FALSE FDI’s impact on competition in domestic markets may be particularly important in the case of services, such as […]
QUESTION According to the U.S. Department of Commerce, which of the following, occurs whenever a U.S. citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign business entity? A. Multilateral investment B. Foreign direct investment C. Reciprocal foreign investment D. International divestment E. Asset divestment ANSWER B
