Exam 6: Investing Abroad Directly

Domestic transaction costs tend to be higher than international transaction costs.

Costs that a firm has to endure even when its investment turns out to be unsatisfactory are referred to as _____.

Compared to licensing,FDI provides more direct and tighter control over foreign operations.

Which of the following is a primary cost of FDI to host countries?

MNEs' possession and leveraging of certain valuable,rare,hard-to-imitate,and organizationally embedded (VRIO)assets overseas in the context of FDI refer to _____.

The free market type of FDI is the most prevalent type of FDI practiced.

The resource-based view argues that internalization is a response to the imperfect rules governing international transactions.

Dissemination risk refers to the cost that a firm has to endure even when its investment turns out to be unsatisfactory.

_____ knowledge can be written down and transferred without losing much of its richness.

An FDI investment is not considered a zero-sum game.

FPI refers to investment in a portfolio of foreign securities that do not entail the active management of foreign assets.

The benefit of ownership lies in the combination of equity ownership rights and management control rights.

Internalization refers to the replacement of cross-border markets with one firm locating in two or more countries.

If Apple invests in iPhone dealerships in Asia but does not engage in distribution in the United States (Apple's host country),then Apple's Asian investment would be considered a(n)_____.

A(n)_____ refers to an industry dominated by a small number of players.

In Round Two of FDI negotiation process between MNEs and host governments,_____.

The television industry in the United States is controlled by seven giant corporations: The Walt Disney Company,CBS Corporation,Viacom,Comcast,Hearst Corporation,Time Warner,and News Corporation.Thus,the television industry in the U.S.is a typical _____ industry.

The radical view treats FDIs as an instrument of imperialism.

Explain the location advantages of FDI.Discuss the value of acquiring and neutralizing location advantages with an example that highlights how a location advantage does not necessarily overlap a country-level advantage.

Why do firms prefer FDI to licensing?