Question 1

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Accepted Answer

A) True 
 B)False

Question 2

Rivals rarely imitate what a firm does in an oligopoly.

Accepted Answer

A) True 
 B)False

Question 3

John Dunning pioneered the eclectic paradigm.

Accepted Answer

A) True 
 B)False

Question 4

________ seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Accepted Answer

A)  Knickerbocker's theory 
B)  Internalization theory 
C)  The noninterventionist theory 
D)  The eclectic paradigm 
A)  Knickerbocker's theory 
B)  Internalization theory 
C)  The noninterventionist theory 
D)  The eclectic paradigm

Question 5

What primarily explains why developing nations are characterized by a lower percentage of cross-border mergers and acquisitions compared to developed nations?

Accepted Answer

A)  fewer target firms to acquire in developing nations 
B)  fierce opposition to mergers and acquisitions in developed nations 
C)  unwillingness of foreign companies to invest in developing nations 
D)  presence of import quotas in developing nations 
A)  fewer target firms to acquire in developing nations 
B)  fierce opposition to mergers and acquisitions in developed nations 
C)  unwillingness of foreign companies to invest in developing nations 
D)  presence of import quotas in developing nations

Question 6

According to pragmatic nationalist view, FDI should be allowed so long as

Accepted Answer

A)  the benefits outweigh the costs. 
B)  they do not aggressively court domestic firms. 
C)  the costs outweigh the benefits. 
D)  the MNE does not seek tax breaks or grants. 
A)  the benefits outweigh the costs. 
B)  they do not aggressively court domestic firms. 
C)  the costs outweigh the benefits. 
D)  the MNE does not seek tax breaks or grants.

Question 7

The pragmatic nationalist view highlights ________ of FDI.

Accepted Answer

A)  only the benefits 
B)  only the costs 
C)  both the benefits and costs 
D)  neither the benefits nor the costs 
A)  only the benefits 
B)  only the costs 
C)  both the benefits and costs 
D)  neither the benefits nor the costs

Question 8

Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?

Accepted Answer

A)  FDI has experienced a slower growth than world output. 
B)  FDI has accelerated faster than world trade growth. 
C)  FDI has remained the same over the past few decades. 
D)  FDI has dropped dramatically. 
A)  FDI has experienced a slower growth than world output. 
B)  FDI has accelerated faster than world trade growth. 
C)  FDI has remained the same over the past few decades. 
D)  FDI has dropped dramatically.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a home-country policy aimed at restricting outward FDI flow?

Accepted Answer

A)  taxing domestic companies' foreign earnings at a higher rate than their domestic earnings 
B)  implementation of government-backed insurance programs to cover major types of foreign investment risk 
C)  eliminating double taxation of foreign income 
D)  persuading host countries to relax their restrictions on inbound FDI 
A)  taxing domestic companies' foreign earnings at a higher rate than their domestic earnings 
B)  implementation of government-backed insurance programs to cover major types of foreign investment risk 
C)  eliminating double taxation of foreign income 
D)  persuading host countries to relax their restrictions on inbound FDI

Question 11

Licensing would be a good option for firms in which of the following industries?

Accepted Answer

A)  It would be a good option in high-technology industries in which protecting firm-specific expertise is of paramount importance. 
B)  It would be a good option in global oligopolies, in which competitive interdependence requires that multinational firms maintain tight control over foreign operations. 
C)  It would be a good option in industries in which intense cost pressures require that multinational firms maintain tight control over foreign operations. 
D)  It would be a good option in fragmented, low-technology industries in which globally dispersed manufacturing is not an option. 
A)  It would be a good option in high-technology industries in which protecting firm-specific expertise is of paramount importance. 
B)  It would be a good option in global oligopolies, in which competitive interdependence requires that multinational firms maintain tight control over foreign operations. 
C)  It would be a good option in industries in which intense cost pressures require that multinational firms maintain tight control over foreign operations. 
D)  It would be a good option in fragmented, low-technology industries in which globally dispersed manufacturing is not an option.

Question 12

The majority of cross-border investment in the developed world is in the form of

Accepted Answer

A)  hostile takeovers. 
B)  greenfield investments. 
C)  competitive investments. 
D)  mergers and acquisitions. 
A)  hostile takeovers. 
B)  greenfield investments. 
C)  competitive investments. 
D)  mergers and acquisitions.

Question 13

A country rejects FDI proposals in certain industries. It does so because the tangible advantages of such investments are lesser than potential costs like loss of employment and reduction of overall well-being. However, it aggressively pursues inviting foreign investments in sectors like infrastructure, education, and health care because of the benefits that accrue with them. Which political view of FDI is discussed in this example?

Accepted Answer

A)  the pure market view 
B)  the free market view 
C)  the radical view 
D)  the pragmatic nationalist view 
A)  the pure market view 
B)  the free market view 
C)  the radical view 
D)  the pragmatic nationalist view

Question 14

FDI occurs when a firm

Accepted Answer

A)  ships its products from one country to another. 
B)  invests directly in facilities to produce a product in a foreign country. 
C)  invests in the shares of another company operating in the same country. 
D)  grants permission to another company in a different country to use its brand name. 
A)  ships its products from one country to another. 
B)  invests directly in facilities to produce a product in a foreign country. 
C)  invests in the shares of another company operating in the same country. 
D)  grants permission to another company in a different country to use its brand name.

Question 15

From the perspective of a firm negotiating the terms of an investment with a host government, the firm's bargaining power is high when the

Accepted Answer

A)  firm has a short time in which to complete the negotiations. 
B)  host government places a high value on what the firm has to offer. 
C)  number of comparable alternatives open to the firm is low. 
D)  host government does not places a high value on the firm's offering. 
A)  firm has a short time in which to complete the negotiations. 
B)  host government places a high value on what the firm has to offer. 
C)  number of comparable alternatives open to the firm is low. 
D)  host government does not places a high value on the firm's offering.

Question 16

Only a few countries have adopted the free market view in its pure form.

Accepted Answer

A) True 
 B)False

Question 17

When a firm is considering FDI, what are some of the negotiating points it must weigh before making its decision?

Accepted Answer

Despite the move toward a free market st

Question 18

Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?

Accepted Answer

A)  tax rebates 
B)  political pressure 
C)  expropriation 
D)  domestic risk insurance 
A)  tax rebates 
B)  political pressure 
C)  expropriation 
D)  domestic risk insurance

Question 19

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Accepted Answer

A)  because of the uncertainty of the overall economic environment 
B)  because most of the job creation is indirect in nature 
C)  because jobs created by an investment may be offset by the jobs lost in domestic companies 
D)  because the unemployment rate more or less remains constant over the short term 
A)  because of the uncertainty of the overall economic environment 
B)  because most of the job creation is indirect in nature 
C)  because jobs created by an investment may be offset by the jobs lost in domestic companies 
D)  because the unemployment rate more or less remains constant over the short term

Question 20

________ is essentially the service-industry version of licensing, although it normally involves much longer-term commitments.

Accepted Answer

A)  Franchising 
B)  Subsidizing 
C)  Greenfield investment 
D)  Patenting 
A)  Franchising 
B)  Subsidizing 
C)  Greenfield investment 
D)  Patenting

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Rivals rarely imitate what a firm does in an oligopoly.

John Dunning pioneered the eclectic paradigm.

________ seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

What primarily explains why developing nations are characterized by a lower percentage of cross-border mergers and acquisitions compared to developed nations?

According to pragmatic nationalist view, FDI should be allowed so long as

The pragmatic nationalist view highlights ________ of FDI.

Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?

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

Which of the following is a home-country policy aimed at restricting outward FDI flow?

Licensing would be a good option for firms in which of the following industries?

The majority of cross-border investment in the developed world is in the form of

FDI occurs when a firm

From the perspective of a firm negotiating the terms of an investment with a host government, the firm's bargaining power is high when the

Only a few countries have adopted the free market view in its pure form.

When a firm is considering FDI, what are some of the negotiating points it must weigh before making its decision?

Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?

Why is it said that not all the new jobs created by FDI represent net additions in employment?

________ is essentially the service-industry version of licensing, although it normally involves much longer-term commitments.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 8: Foreign Direct Investment

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Rivals rarely imitate what a firm does in an oligopoly.

John Dunning pioneered the eclectic paradigm.

________ seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

What primarily explains why developing nations are characterized by a lower percentage of cross-border mergers and acquisitions compared to developed nations?

According to pragmatic nationalist view, FDI should be allowed so long as

The pragmatic nationalist view highlights ________ of FDI.

Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?

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

Which of the following is a home-country policy aimed at restricting outward FDI flow?

Licensing would be a good option for firms in which of the following industries?

The majority of cross-border investment in the developed world is in the form of

FDI occurs when a firm

From the perspective of a firm negotiating the terms of an investment with a host government, the firm's bargaining power is high when the

Only a few countries have adopted the free market view in its pure form.

When a firm is considering FDI, what are some of the negotiating points it must weigh before making its decision?

Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?

Why is it said that not all the new jobs created by FDI represent net additions in employment?

________ is essentially the service-industry version of licensing, although it normally involves much longer-term commitments.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters