Question 1

Which of the following observations concerning Knickerbocker's theory is true?

Accepted Answer

A)  It does not explain imitative FDI behavior by firms in oligopolistic industries. 
B)  Economists favor this theory as an explanation for FDI compared to the internalization theory. 
C)  It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad. 
D)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license. 
A)  It does not explain imitative FDI behavior by firms in oligopolistic industries. 
B)  Economists favor this theory as an explanation for FDI compared to the internalization theory. 
C)  It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad. 
D)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.

Question 2

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting?

Accepted Answer

A)  by implementing import quotas 
B)  by imposing FDI limits in industries 
C)  by increasing tax rates 
D)  by limiting free flow of capital 
A)  by implementing import quotas 
B)  by imposing FDI limits in industries 
C)  by increasing tax rates 
D)  by limiting free flow of capital

Question 3

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as

Accepted Answer

A)  location-specific advantages. 
B)  capital-specific advantages. 
C)  absolute advantages. 
D)  production factor advantages. 
A)  location-specific advantages. 
B)  capital-specific advantages. 
C)  absolute advantages. 
D)  production factor advantages.

Question 4

The two most common methods of restricting inward FDI are ownership restraints and

Accepted Answer

A)  resource endowments. 
B)  performance requirements. 
C)  national sovereignty. 
D)  incentives. 
A)  resource endowments. 
B)  performance requirements. 
C)  national sovereignty. 
D)  incentives.

Question 5

Describe the situations when licensing is not a good option for a firm.

Accepted Answer

Licensing is not a good option in three

Question 6

Which of the following specifically reduces the viability of an exporting strategy specifically for products with low value-to-weight ratios?

Accepted Answer

A)  foreign exchange controls 
B)  trade barriers 
C)  transportation costs 
D)  output quality 
A)  foreign exchange controls 
B)  trade barriers 
C)  transportation costs 
D)  output quality

Question 7

The WTO supports the promotion of international trade in services.

Accepted Answer

A) True 
 B)False

Question 8

An aspect of ________ is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

Accepted Answer

A)  the radical view 
B)  the noninterventionist principle 
C)  the free market view 
D)  pragmatic nationalism 
A)  the radical view 
B)  the noninterventionist principle 
C)  the free market view 
D)  pragmatic nationalism

Question 9

Licensing involves the establishment of a new operation in a foreign country.

Accepted Answer

A) True 
 B)False

Question 10

Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Accepted Answer

A)  internalization theory 
B)  product life-cycle theory 
C)  perfect markets theory 
D)  random walk theory 
A)  internalization theory 
B)  product life-cycle theory 
C)  perfect markets theory 
D)  random walk theory

Question 11

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

Accepted Answer

An oligopoly is an industry composed of

Question 12

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Accepted Answer

A)  if the foreign subsidiary imports a substantial number of its inputs from abroad 
B)  if the FDI reduces existing employment opportunities 
C)  if the FDI is a substitute for imports of goods or services 
D)  if the FDI results in substitution of products produced domestically 
A)  if the foreign subsidiary imports a substantial number of its inputs from abroad 
B)  if the FDI reduces existing employment opportunities 
C)  if the FDI is a substitute for imports of goods or services 
D)  if the FDI results in substitution of products produced domestically

Question 13

Which of the following is a major drawback of using Knickerbocker's theory in explaining FDI?

Accepted Answer

A)  It ignores the fact that firms invest in a foreign country when demand in that country will support local production. 
B)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license. 
C)  It fails to identify when it is profitable to invest abroad. 
D)  It ignores the fact that licensing as an entry strategy has its limitations. 
A)  It ignores the fact that firms invest in a foreign country when demand in that country will support local production. 
B)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license. 
C)  It fails to identify when it is profitable to invest abroad. 
D)  It ignores the fact that licensing as an entry strategy has its limitations.

Question 14

Tax concessions, low-interest loans, and grants or subsidies are all incentives that governments offer to foreign firms to invest in their countries.

Accepted Answer

A) True 
 B)False

Question 15

According to Knickerbocker's theory

Accepted Answer

A)  when a firm has valuable know-how that cannot be adequately protected by a licensing contract, it engages in FDI. 
B)  when a firm's skills and know-how are not amenable to licensing, it usually prefers the FDI route. 
C)  by placing tariffs on imported goods, governments indirectly increase the cost of exporting relative to foreign direct investment and licensing. 
D)  when a firm that is part of an oligopolistic industry expands into a foreign market, other firms in the industry will be compelled to make similar investments. 
A)  when a firm has valuable know-how that cannot be adequately protected by a licensing contract, it engages in FDI. 
B)  when a firm's skills and know-how are not amenable to licensing, it usually prefers the FDI route. 
C)  by placing tariffs on imported goods, governments indirectly increase the cost of exporting relative to foreign direct investment and licensing. 
D)  when a firm that is part of an oligopolistic industry expands into a foreign market, other firms in the industry will be compelled to make similar investments.

Question 16

Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.

Accepted Answer

Products with low value-to-weight ratios

Question 17

Discuss the two main forms of FDI.

Accepted Answer

FDI takes on two main forms. The first i

Question 18

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Accepted Answer

A) True 
 B)False

Question 19

Mergers and acquisitions are quicker to execute than greenfield investments.

Accepted Answer

A) True 
 B)False

Question 20

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Accepted Answer

The main benefits of inward FDI for a ho

Which of the following observations concerning Knickerbocker's theory is true?

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting?

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as

The two most common methods of restricting inward FDI are ownership restraints and

Describe the situations when licensing is not a good option for a firm.

Which of the following specifically reduces the viability of an exporting strategy specifically for products with low value-to-weight ratios?

The WTO supports the promotion of international trade in services.

An aspect of ________ is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

Licensing involves the establishment of a new operation in a foreign country.

Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Which of the following is a major drawback of using Knickerbocker's theory in explaining FDI?

Tax concessions, low-interest loans, and grants or subsidies are all incentives that governments offer to foreign firms to invest in their countries.

According to Knickerbocker's theory

Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.

Discuss the two main forms of FDI.

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Mergers and acquisitions are quicker to execute than greenfield investments.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

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

Which of the following observations concerning Knickerbocker's theory is true?

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting?

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as

The two most common methods of restricting inward FDI are ownership restraints and

Describe the situations when licensing is not a good option for a firm.

Which of the following specifically reduces the viability of an exporting strategy specifically for products with low value-to-weight ratios?

The WTO supports the promotion of international trade in services.

An aspect of ________ is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

Licensing involves the establishment of a new operation in a foreign country.

Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Which of the following is a major drawback of using Knickerbocker's theory in explaining FDI?

Tax concessions, low-interest loans, and grants or subsidies are all incentives that governments offer to foreign firms to invest in their countries.

According to Knickerbocker's theory

Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.

Discuss the two main forms of FDI.

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Mergers and acquisitions are quicker to execute than greenfield investments.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

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