Exam 7: Foreign Direct Investment

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. -Blickinstock has identified a company that it can acquire or merge with.Which of the following statements would represent the least likely reason for Blickinstock to go ahead with the merger?

What two factors propel growth in foreign direct investment?

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 ________.

Firms engage in FDI when the firms they supply have already invested abroad.This practice of "following clients" is observed in industries having ________.

Which of the following countries would a watchmaker most prefer to manufacture its watches in,in order to capitalize on buyer perceptions of high quality?

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 ________.

Trade barriers and specialized knowledge are examples of market imperfections.

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

According to the market imperfections theory,competition is a common market imperfection.

Making investments in distribution in order to leapfrog channels of distribution that are tightly controlled by competitors is an example of ________.

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.

A(n)________ advantage is the one that a company gains from incorporating a business activity within itself rather than leaving it to a relatively inefficient market.

________ are those that use outdated and obsolete technologies or employ low-wage workers with few skills.

Firms from emerging markets account for a greater share of global mergers and acquisitions than developed markets.

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

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

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

________ is the extension of company activities into stages of production that provide a firm's inputs or absorb its outputs.

Which of the following statements is true of rationalized production?

Which of the following is a major driver of foreign direct investment?