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 Which of the following indicates that a firm has a full outright stake in an acquisition? A. Anderson Corporations acquires at least 75 percent of a company. B. Sheffield Enterprises acquires at least 60 percent of a company. C. Arthur Enterprises acquires 98 percent of a company. D. Maximus Corporations acquires 100 percent of […]
QUESTION Which of the following is true regarding the difference between GATT and WTO? A. The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment unlike GATT. B. WTO operates on the basis of consensus unlike GATT. C. GATT gives trading partners the right to compensation or, in the last […]
QUESTION By the early 1990s, the radical position toward FDI was in retreat due to the rise of communism in eastern Europe. Indicate whether the statement is true or false. ANSWER FALSE By the early 1990s, the radical position was in retreat almost everywhere. There seem to be three reasons for this: (1) the […]
