Question 1

The purchase of an existing company or facility is known as a(n) ________.

Accepted Answer

A)  greenfield investment 
B)  licensing 
C)  acquisition 
D)  equity joint venture 
A)  greenfield investment 
B)  licensing 
C)  acquisition 
D)  equity joint venture

Question 2

Explain the difference between vertical FDI and horizontal FDI. Provide an example that illustrates the difference between vertical and horizontal integration.

Accepted Answer

Vertical integration is an arrangement w

Question 3

A firm that develops the capacity to sell its products by investing in marketing and selling operations is ________.

Accepted Answer

A)  acquiring downstream value-chain facilities 
B)  acquiring upstream value-chain facilities 
C)  engaging in centralization 
D)  engaging in decentralization 
A)  acquiring downstream value-chain facilities 
B)  acquiring upstream value-chain facilities 
C)  engaging in centralization 
D)  engaging in decentralization

Question 4

Which of the following represents a human resource factor that firms must consider when selecting an FDI location?

Accepted Answer

A)  intellectual property protection 
B)  transparency and corruption 
C)  extent of bureaucracy and red tape 
D)  involvement of labor unions 
A)  intellectual property protection 
B)  transparency and corruption 
C)  extent of bureaucracy and red tape 
D)  involvement of labor unions

Question 5

A greenfield investment is a direct investment to purchase an existing company or facility.

Accepted Answer

A) True 
 B)False

Question 6

A(n) ________ is a project-based, usually nonequity venture initiated by multiple partners to fulfill a large-scale project.

Accepted Answer

A)  greenfield investment 
B)  acquisition 
C)  merger 
D)  consortium 
A)  greenfield investment 
B)  acquisition 
C)  merger 
D)  consortium

Question 7

A(n)________ is a special type of acquisition in which two companies join to form a larger firm.

Accepted Answer

A)  merger 
B)  acquisition 
C)  wholly owned direct investment 
D)  greenfield investment 
A)  merger 
B)  acquisition 
C)  wholly owned direct investment 
D)  greenfield investment

Question 8

ABC Appliance (Scenario)
The ABC Appliance Corporation is a Florida-based manufacturer of refrigerators, dishwashers, and other large household appliances. ABC takes advantage of NAFTA, and as a result, the firm has loyal customers across North America. ABC managers would like to expand into the Asian market, but are unsure of the best way to do so. ABC managers are meeting to discuss various possibilities for entering the Asian market.
-Which of the following most likely supports a decision to enter the Asian market through a project-based, nonequity collaborative venture with an Asian appliance manufacturer to create an environmentally friendly dishwasher?

Accepted Answer

A)  Asian firms have offered to pool their resources with ABC to create a new legal entity. 
B)  Managers of both firms have decided not to seek ownership, rather they have decided to pool resources. 
C)  ABC managers have the financial resources to quickly build a new Asian plant. 
D)  The Asian government has offered incentives to ABC if the firm builds a plant. 
A)  Asian firms have offered to pool their resources with ABC to create a new legal entity. 
B)  Managers of both firms have decided not to seek ownership, rather they have decided to pool resources. 
C)  ABC managers have the financial resources to quickly build a new Asian plant. 
D)  The Asian government has offered incentives to ABC if the firm builds a plant.

Question 9

Explain why MNEs prefer acquisition instead of greenfield FDI. Why do foreign governments encourage greenfield FDI?

Accepted Answer

Multinational enterprises may favor acqu

Question 10

A firm most likely enters the home market of a foreign competitor in order to ________.

Accepted Answer

A)  enter a collaborative venture with the competitor 
B)  gain access to the competitor's government contracts 
C)  force the competitor to expend resources to defend its market 
D)  interfere with the competitor's marketing campaign 
A)  enter a collaborative venture with the competitor 
B)  gain access to the competitor's government contracts 
C)  force the competitor to expend resources to defend its market 
D)  interfere with the competitor's marketing campaign

Question 11

Which of the following is a characteristic of an equity joint venture?

Accepted Answer

A)  simple management structure 
B)  facilitates knowledge transfer between partners 
C)  easy to terminate 
D)  lesser exposure to political risk 
A)  simple management structure 
B)  facilitates knowledge transfer between partners 
C)  easy to terminate 
D)  lesser exposure to political risk

Question 12

New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the four key differences between project-based, nonequity ventures and equity ventures.

Accepted Answer

Project-based collaborations differ from

Question 14

The rate of inflation is a(n) ________ factor to be considered while selecting the location for FDI.

Accepted Answer

A)  profit retention 
B)  market 
C)  infrastructural 
D)  human resource 
A)  profit retention 
B)  market 
C)  infrastructural 
D)  human resource

Question 15

Companies opt for FDI to obtain advantages associated with locating at the hub of knowledge development and innovation in a given industry.

Accepted Answer

A) True 
 B)False

Question 16

Ciao Manufacturing Location (Scenario)
An Italian car company, Ciao, has made plans to expand its operations by building a manufacturing facility in a foreign market. Ciao has been very successful selling its small, economical, and stylish cars in Italy and Spain, and firm managers believe that Ciao cars will be equally profitable in other markets. Ciao managers are trying to determine whether Canada or Russia would be the best location for a new automobile manufacturing facility.
-Which of the following questions is most important for Ciao managers to evaluate in their decision regarding the location of the new manufacturing facility?

Accepted Answer

A)  What would be the costs and availability of skilled labor in Canada and Russia? 
B)  What other industries manufacture products in Canada and Russia? 
C)  How much time will it take to train managers in Canada and Russia? 
D)  How should the current marketing strategies be modified to serve markets in Canada and Russia? 
A)  What would be the costs and availability of skilled labor in Canada and Russia? 
B)  What other industries manufacture products in Canada and Russia? 
C)  How much time will it take to train managers in Canada and Russia? 
D)  How should the current marketing strategies be modified to serve markets in Canada and Russia?

Question 17

International portfolio investment is characterized by ________.

Accepted Answer

A)  short-term foreign market speculation 
B)  long-term administration of MNE stocks 
C)  active control of a foreign business 
D)  passive ownership of foreign stocks and bonds 
A)  short-term foreign market speculation 
B)  long-term administration of MNE stocks 
C)  active control of a foreign business 
D)  passive ownership of foreign stocks and bonds

Question 18

Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ________.

Accepted Answer

A)  locating in culturally similar countries 
B)  investing in international securities 
C)  hiring additional local personnel 
D)  diversifying their corporate activities 
A)  locating in culturally similar countries 
B)  investing in international securities 
C)  hiring additional local personnel 
D)  diversifying their corporate activities

Question 19

Which of the following is a characteristic of successful international retailers?

Accepted Answer

A)  conservative managers and salespeople and a centralized organizational system 
B)  an entrepreneurial approach to foreign markets and an understanding of the target market 
C)  significant financial borrowings and high foreign and domestic operational costs 
D)  extreme competition and support from home-country governments exclusively 
A)  conservative managers and salespeople and a centralized organizational system 
B)  an entrepreneurial approach to foreign markets and an understanding of the target market 
C)  significant financial borrowings and high foreign and domestic operational costs 
D)  extreme competition and support from home-country governments exclusively

Question 20

A merger is a special type of acquisition.

Accepted Answer

A) True 
 B)False

The purchase of an existing company or facility is known as a(n) ________.

Explain the difference between vertical FDI and horizontal FDI. Provide an example that illustrates the difference between vertical and horizontal integration.

A firm that develops the capacity to sell its products by investing in marketing and selling operations is ________.

Which of the following represents a human resource factor that firms must consider when selecting an FDI location?

A greenfield investment is a direct investment to purchase an existing company or facility.

A(n) ________ is a project-based, usually nonequity venture initiated by multiple partners to fulfill a large-scale project.

A(n)________ is a special type of acquisition in which two companies join to form a larger firm.

Explain why MNEs prefer acquisition instead of greenfield FDI. Why do foreign governments encourage greenfield FDI?

A firm most likely enters the home market of a foreign competitor in order to ________.

Which of the following is a characteristic of an equity joint venture?

New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.

Discuss the four key differences between project-based, nonequity ventures and equity ventures.

The rate of inflation is a(n) ________ factor to be considered while selecting the location for FDI.

Companies opt for FDI to obtain advantages associated with locating at the hub of knowledge development and innovation in a given industry.

International portfolio investment is characterized by ________.

Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ________.

Which of the following is a characteristic of successful international retailers?

A merger is a special type of acquisition.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Licensing, Franchising, and Other Contractual Strategies

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters

Exam 14: Foreign Direct Investment and Collaborative Ventures

The purchase of an existing company or facility is known as a(n) ________.

Explain the difference between vertical FDI and horizontal FDI. Provide an example that illustrates the difference between vertical and horizontal integration.

A firm that develops the capacity to sell its products by investing in marketing and selling operations is ________.

Which of the following represents a human resource factor that firms must consider when selecting an FDI location?

A greenfield investment is a direct investment to purchase an existing company or facility.

A(n) ________ is a project-based, usually nonequity venture initiated by multiple partners to fulfill a large-scale project.

A(n)________ is a special type of acquisition in which two companies join to form a larger firm.

Explain why MNEs prefer acquisition instead of greenfield FDI. Why do foreign governments encourage greenfield FDI?

A firm most likely enters the home market of a foreign competitor in order to ________.

Which of the following is a characteristic of an equity joint venture?

New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.

Discuss the four key differences between project-based, nonequity ventures and equity ventures.

The rate of inflation is a(n) ________ factor to be considered while selecting the location for FDI.

Companies opt for FDI to obtain advantages associated with locating at the hub of knowledge development and innovation in a given industry.

International portfolio investment is characterized by ________.

Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ________.

Which of the following is a characteristic of successful international retailers?

A merger is a special type of acquisition.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Licensing, Franchising, and Other Contractual Strategies

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters