Question 1

The extension of a company's activities into stages of production that absorb the company's outputs is known as ________.

Accepted Answer

A) forward integration 
B) backward integration 
C) an internalization advantage 
D) an ownership advantage 
A) forward integration 
B) backward integration 
C) an internalization advantage 
D) an ownership advantage A

Question 2

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?

Accepted Answer

Entrepreneurs and small businesses also play a role in the expansion of FDI inflows.There is no data on the portion of FDI contributed by small businesses,but we know from anecdotal evidence that these companies are engaged in FDI.Unhindered by many of the constraints of a large company,entrepreneurs investing in other markets often demonstrate an inspiring can-do spirit mixed with ingenuity and bravado.
Building facilities in a market abroad can be difficult.Managers can minimize risk by preparing their companies for a number of surprises they might face.
1.Human Resource Policies-Companies cannot always import home country policies without violating local laws or offending local customs.Countries have differing requirements for plant operations and their own regulations regarding business operations.
2.Labor Costs-France has a minimum wage of about $12 an hour,whereas Mexico has a minimum wage of nearly $5 a day.But Mexico's real minimum wage is nearly double that due to government-mandated benefits and employment practices.Such differences are not always obvious.
3.Mandated Benefits-These include company supplied clothing and meals,required profit sharing,guaranteed employment contracts,and generous dismissal policies.These costs can exceed an employee's wages and are typically not negotiable.
4.Labor Unions-In some countries,organized labor is found in nearly every industry and at almost every company.Rather than dealing with a single union,managers may need to negotiate with five or six different unions,each of which represents a distinct skill or profession.
5.Information-Sometimes there simply is no reliable data on factors such as labor availability,cost of energy,and national inflation rates.These data are generally high quality in developed countries and suspect in emerging and developing ones.
6.Personal and Political Contacts-These contacts can be extremely important in developing and emerging markets and can be the only way to establish operations.But complying with locally accepted practices can cause ethical dilemmas for managers.

Question 3

According to the international product life cycle theory,in which of the following stages is a good produced in the home country because of uncertain domestic demand and to keep production close to the research department?

Accepted Answer

A) standardized product stage 
B) maturing product stage 
C) declining product stage 
D) new product stage 
A) standardized product stage 
B) maturing product stage 
C) declining product stage 
D) new product stage D

Question 4

The eclectic theory states that firms undertake foreign direct investment only when the features of a particular location make the location appealing for investment.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) to get a foothold in new geographic markets 
B) to raise company budgets for increased research and development activities 
C) to increase a firm's global competitiveness 
D) to fill the gaps in companies' product lines in a global industry 
A) to get a foothold in new geographic markets 
B) to raise company budgets for increased research and development activities 
C) to increase a firm's global competitiveness 
D) to fill the gaps in companies' product lines in a global industry

Question 6

Which of the following is the type of production illustrated in the automobile industry?

Accepted Answer

A) customized production 
B) rationalized production 
C) job production 
D) craft production 
A) customized production 
B) rationalized production 
C) job production 
D) craft production

Question 7

Which of the following accounts of a country's balance of payments records transactions involving the export of services?

Accepted Answer

A) transactional account 
B) capital account 
C) savings account 
D) current account 
A) transactional account 
B) capital account 
C) savings account 
D) current account

Question 8

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.
-If Happyland advertises its beaches and attracts tourists,the tourism-related income would be recorded in its ________ account.

Accepted Answer

A) capital 
B) services 
C) income payments 
D) merchandise 
A) capital 
B) services 
C) income payments 
D) merchandise

Question 9

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.
-In which of the following accounts would GMI's purchase of the company in Brazil appear?

Accepted Answer

A) the current account of the United States 
B) the current account of Brazil 
C) the capital account of the Thailand 
D) the capital accounts of Brazil and the United States 
A) the current account of the United States 
B) the current account of Brazil 
C) the capital account of the Thailand 
D) the capital accounts of Brazil and the United States

Question 10

A country's ________ is a national accounting system that records all monetary transactions to entities in other countries and all receipts coming into the nation.

Accepted Answer

A) balance of payments 
B) chart of accounts 
C) global financial system 
D) international monetary system 
A) balance of payments 
B) chart of accounts 
C) global financial system 
D) international monetary system

Question 11

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

Accepted Answer

A) to keep their balance of payments under control 
B) to protect their outdated technology and management skills 
C) to strictly encourage the establishment of sunset industries 
D) to decrease the country's competitiveness in the global market 
A) to keep their balance of payments under control 
B) to protect their outdated technology and management skills 
C) to strictly encourage the establishment of sunset industries 
D) to decrease the country's competitiveness in the global market

Question 12

A company can achieve market power through ________.

Accepted Answer

A) ownership advantages 
B) internalization advantages 
C) horizontal integration 
D) vertical integration 
A) ownership advantages 
B) internalization advantages 
C) horizontal integration 
D) vertical integration

Question 13

A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called ________ production.

Accepted Answer

A) rationalized 
B) craft 
C) job 
D) customized 
A) rationalized 
B) craft 
C) job 
D) customized

Question 14

The possibility that a company will create a future competitor by charging another company for access to its knowledge is a(n)________ that can encourage FDI.

Accepted Answer

A) ownership advantage 
B) internalization advantage 
C) market imperfection 
D) trade barrier 
A) ownership advantage 
B) internalization advantage 
C) market imperfection 
D) trade barrier

Question 15

How does the eclectic theory explain the concept of FDI? How can a host country offer incentives to attract FDI?

Accepted Answer

The eclectic theory states that firms un

Question 16

If a Japanese citizen invests in the Australian stock market,the transaction would show up on the capital account in the balance of payments of ________.

Accepted Answer

A) Japan 
B) Australia 
C) both Japan and Australia 
D) neither Japan nor Australia 
A) Japan 
B) Australia 
C) both Japan and Australia 
D) neither Japan nor Australia

Question 17

When a U.S.company buys shares of stock in a French company on France's stock market,the U.S.balance of payments records the transaction as an ________.

Accepted Answer

A) outflow of capital with a plus sign 
B) outflow of capital with a minus sign 
C) inflow of capital with a plus sign 
D) inflow of capital with a minus sign 
A) outflow of capital with a plus sign 
B) outflow of capital with a minus sign 
C) inflow of capital with a plus sign 
D) inflow of capital with a minus sign

Question 18

The ________ theory states that a firm tries to establish a dominant presence in an industry by undertaking foreign direct investment.

Accepted Answer

A) eclectic 
B) market power 
C) market imperfections 
D) international product life cycle 
A) eclectic 
B) market power 
C) market imperfections 
D) international product life cycle

Question 19

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.
-Which of the following methods will Happyland use to discourage foreign direct investment inflows?

Accepted Answer

A) tax incentives 
B) low-interest loans 
C) performance demands 
D) tax breaks 
A) tax incentives 
B) low-interest loans 
C) performance demands 
D) tax breaks

Question 20

Which of the following statements is true of rationalized production?

Accepted Answer

A) It depends on a large number of distribution channels which leads to inefficiency. 
B) It depends on a large number of distribution channels which increases the cost of production. 
C) It can bring the entire production process to a standstill,if work is stopped in one country. 
D) It is an unethical method of production as it uses questionable labor practices to reduce costs. 
A) It depends on a large number of distribution channels which leads to inefficiency. 
B) It depends on a large number of distribution channels which increases the cost of production. 
C) It can bring the entire production process to a standstill,if work is stopped in one country. 
D) It is an unethical method of production as it uses questionable labor practices to reduce costs.

The extension of a company's activities into stages of production that absorb the company's outputs is known as ________.

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?

According to the international product life cycle theory,in which of the following stages is a good produced in the home country because of uncertain domestic demand and to keep production close to the research department?

The eclectic theory states that firms undertake foreign direct investment only when the features of a particular location make the location appealing for investment.

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

Which of the following is the type of production illustrated in the automobile industry?

Which of the following accounts of a country's balance of payments records transactions involving the export of services?

A country's ________ is a national accounting system that records all monetary transactions to entities in other countries and all receipts coming into the nation.

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

A company can achieve market power through ________.

A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called ________ production.

The possibility that a company will create a future competitor by charging another company for access to its knowledge is a(n)________ that can encourage FDI.

How does the eclectic theory explain the concept of FDI? How can a host country offer incentives to attract FDI?

If a Japanese citizen invests in the Australian stock market,the transaction would show up on the capital account in the balance of payments of ________.

When a U.S.company buys shares of stock in a French company on France's stock market,the U.S.balance of payments records the transaction as an ________.

The ________ theory states that a firm tries to establish a dominant presence in an industry by undertaking foreign direct investment.

Which of the following statements is true of rationalized production?

Globalization

Cross-Cultural Business

Politics, Law, and Business Ethics

Economics and Emerging Markets

International Trade

Business-Government Trade Relations

Regional Economic Integration

International Financial Markets

International Money System

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters

Exam 7: Foreign Direct Investment

The extension of a company's activities into stages of production that absorb the company's outputs is known as ________.

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?

According to the international product life cycle theory,in which of the following stages is a good produced in the home country because of uncertain domestic demand and to keep production close to the research department?

The eclectic theory states that firms undertake foreign direct investment only when the features of a particular location make the location appealing for investment.

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

Which of the following is the type of production illustrated in the automobile industry?

Which of the following accounts of a country's balance of payments records transactions involving the export of services?

A country's ________ is a national accounting system that records all monetary transactions to entities in other countries and all receipts coming into the nation.

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

A company can achieve market power through ________.

A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called ________ production.

The possibility that a company will create a future competitor by charging another company for access to its knowledge is a(n)________ that can encourage FDI.

How does the eclectic theory explain the concept of FDI? How can a host country offer incentives to attract FDI?

If a Japanese citizen invests in the Australian stock market,the transaction would show up on the capital account in the balance of payments of ________.

When a U.S.company buys shares of stock in a French company on France's stock market,the U.S.balance of payments records the transaction as an ________.

The ________ theory states that a firm tries to establish a dominant presence in an industry by undertaking foreign direct investment.

Which of the following statements is true of rationalized production?

Globalization

Cross-Cultural Business

Politics, Law, and Business Ethics

Economics and Emerging Markets

International Trade

Business-Government Trade Relations

Regional Economic Integration

International Financial Markets

International Money System

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters