Exam 7: Foreign Direct Investment

Scenario: Blickinstock at the Crossroads Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin America. To that end, Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary. Keith Moon, Blickinstock's vice president of global business development, will be making a presentation to the board outlining the company's options. -If board members ask about the maquiladora industry,Keith would explain that it refers to ________.

Which of the following is a form of foreign direct investment?

According to the eclectic theory that explains FDI,an ownership advantage is the advantage that arises from internalizing a business activity rather than leaving it to a relatively inefficient market.

Ownership restrictions and performance demands are used by ________.

Which of the following is least likely a reason for companies to seek cross-border mergers and acquisitions?

Exports and imports of tourism and business consulting are included in the ________ account of a country's balance of payments.

Scenario: Blickinstock at the Crossroads Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin America. To that end, Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary. Keith Moon, Blickinstock's vice president of global business development, will be making a presentation to the board outlining the company's options. -If Blickinstock's home government tries to stop the company from investing in Latin America,the government is most likely trying to ________.

Portfolio investment is the purchase of physical assets of a company in another country to gain a degree of management control.

A current account surplus occurs when a country exports more goods and receives more income from abroad than it imports and pays abroad.

When a U.S.subsidiary in another country remits profits back to its parent company in the U.S.,the receipt of profits is recorded in the ________.

Which of the following methods is used by a host country to restrict incoming foreign direct investment?

Which international trade theory originated in the marketing field?

Scenario: Happyland Happyland is a country characterized by beautiful beaches, vast natural resources, and a highly skilled labor force. Happyland is now encouraging foreign direct investment flows. The country has been exporting textiles, computer hardware, and software programs. The net result of the trade is that Happyland exports far more goods and services and receives more income from abroad than it imports and pays abroad. -Transactions involving the export of Happyland's textile and computer products are included in its ________ account.

Scenario: Global Manufacturing Inc. (GMI) Global Manufacturing Inc., a fast-growing U.S. company, plans for a production system in which two components of its product will be manufactured in locations where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI plans to purchase an existing company in Brazil to produce component A and build a subsidiary in Thailand to produce component B. -GMI's subsidiary for component B in Thailand is best described as a(n)________.

Discuss the role entrepreneurs and small businesses play in the expansion of FDI.What are some of the surprises that managers face as they invest in new markets abroad?

Using any two of the four theories that appear in your text,explain why companies engage in foreign direct investment.

The soaring cost of developing subsequent stages of technology has led multinationals to engage in cross-border alliances and acquisitions.

Describe any three management issues involved in foreign direct investment decisions.

Which of the following is a reason behind intervention by a host country on matters related to FDI?

Explain the theory of market imperfections and describe the two major market imperfections.