QUESTION The WTO embraces the promotion of international trade in services. Indicate whether the statement is true or false. ANSWER TRUE The WTO embraces the promotion of international trade in services. Because many services have to be produced where they are sold, exporting is not an option. Given this, the WTO has become involved […]
QUESTION Performance requirements are controls over the behavior of the MNE’s local subsidiary. Indicate whether the statement is true or false. ANSWER TRUE Performance requirements can also take several forms. Performance requirements are controls over the behavior of the MNE’s local subsidiary. The most common performance requirements are related to local content, exports, technology […]
QUESTION Ownership restraints and performance requirements are the two most common ways in which host governments restrict FDI. Indicate whether the statement is true or false. ANSWER TRUE Host governments use a wide range of controls to restrict FDI in one way or another. The two most common are ownership restraints and performance requirements.
QUESTION A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan. This is an example of: A. insourcing. B. stock consolidation. C. foreign direct investment. D. product differentiation. E. market segmentation. ANSWER C
QUESTION Franchising is essentially the service-industry version of licensing, although it normally involves much longer-term commitments than licensing. Indicate whether the statement is true or false. ANSWER TRUE Franchising is essentially the service-industry version of licensing, although it normally involves much longer-term commitments than licensing. With franchising, the firm licenses its brand name to […]
QUESTION A firm’s bargaining power is low when the host government places a low value on what the firm has to offer. Indicate whether the statement is true or false. ANSWER TRUE From the perspective of a firm negotiating the terms of an investment with a host government, the firm’s bargaining power is high […]
QUESTION Despite the move toward a free market stance in recent years, many countries still have a rather pragmatic stance toward FDI. Indicate whether the statement is true or false. ANSWER TRUE Despite the move toward a free market stance in recent years, many countries still have a rather pragmatic stance toward FDI. In […]
QUESTION Which of the following is most likely to involve establishment of a new operation in a foreign country? A. Consolidation B. Greenfield investment C. Acquisition D. Licensing agreement E. Mass customization ANSWER B
QUESTION The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were: A. global telecommunication and financial services industries. B. scientific research and defense sector. C. pharmaceuticals and heavy metal industry. D. pharmaceuticals and biotechnology. […]
QUESTION According to the extreme version of radical view, no country should ever permit foreign corporations to undertake FDI, because they can never be instruments of economic development, only of economic domination. Indicate whether the statement is true or false. ANSWER TRUE Radical writers argue that the multinational enterprise (MNE) is an instrument of […]
