Question 1

All of the following may be justification for a strategic alliance EXCEPT:

Accepted Answer

A) takeover defense. 
B) a joint venture to pool resources for research and development. 
C) joint marketing and serving agreements. 
D) All of the above are legitimate reasons for strategic alliances. 
A) takeover defense. 
B) a joint venture to pool resources for research and development. 
C) joint marketing and serving agreements. 
D) All of the above are legitimate reasons for strategic alliances.

Question 2

A/An ________ would be an example of an owner-specific advantage for an MNE.

Accepted Answer

A) patent 
B) economy of scale 
C) economy of scope 
D) all of the above 
A) patent 
B) economy of scale 
C) economy of scope 
D) all of the above

Question 3

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Accepted Answer

A) fewer agency costs 
B) fewer direct advantages from research and development 
C) a greater risk of losing markets to copycat goods producers 
D) an inability to exploit R&D as effectively as if also invested abroad 
A) fewer agency costs 
B) fewer direct advantages from research and development 
C) a greater risk of losing markets to copycat goods producers 
D) an inability to exploit R&D as effectively as if also invested abroad

Question 4

As a general rule, the decision about where to invest abroad for the first time is the same as the decision about where to reinvest abroad.

Accepted Answer

A) True 
 B)False

Question 5

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds, and political risk is often minimized.

Accepted Answer

A) True 
 B)False

Question 6

Business risk can be measured through sensitivity analysis but from only the project viewpoint.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Accepted Answer

A) MNEs initially invest in countries with a similar "national psychic." 
B) Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C) Initial investments tend to be much larger than subsequent ones. 
D) All of the above have been observed. 
A) MNEs initially invest in countries with a similar "national psychic." 
B) Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C) Initial investments tend to be much larger than subsequent ones. 
D) All of the above have been observed.

Question 8

Which of the following is NOT a factor of Porter's "diamond of national advantage"?

Accepted Answer

A) factor conditions 
B) demand conditions 
C) related and supporting industries 
D) All of the above are factors of the diamond of national advantage. 
A) factor conditions 
B) demand conditions 
C) related and supporting industries 
D) All of the above are factors of the diamond of national advantage.

Question 9

________ industries are NOT typically "protected" by government policy.

Accepted Answer

A) Textiles 
B) Defense 
C) Agriculture 
D) "Infant" industries 
A) Textiles 
B) Defense 
C) Agriculture 
D) "Infant" industries

Question 10

The authors were unable to identify in lesser developed countries specific firms that are nearing the status of global MNE.

Accepted Answer

A) True 
 B)False

Question 11

The L in OLI refers to an advantage in a firm's home market that is a:

Accepted Answer

A) liability in the domestic market. 
B) location-specific advantage. 
C) longevity in a particular market. 
D) none of the above 
A) liability in the domestic market. 
B) location-specific advantage. 
C) longevity in a particular market. 
D) none of the above

Question 12

In practice, when expanding into other countries, firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

Accepted Answer

A) True 
 B)False

Question 13

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

Accepted Answer

A) Political risk 
B) Portfolio risk 
C) Interest rate risk 
D) Governance risk 
A) Political risk 
B) Portfolio risk 
C) Interest rate risk 
D) Governance risk

Question 14

A number of institutional services provide updated country risk ratings on a regular basis. This is an example of micro-risk information for MNEs using this data.

Accepted Answer

A) True 
 B)False

Question 15

The I in OLI refers to an advantage in a firm's home market that is an:

Accepted Answer

A) internalization. 
B) industry-specific advantage. 
C) international abnormality. 
D) none of the above 
A) internalization. 
B) industry-specific advantage. 
C) international abnormality. 
D) none of the above

Question 16

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Accepted Answer

Blocked funds are those that have been r

Question 17

Which of the following is NOT an advantage to a joint venture?

Accepted Answer

A) Possible loss of opportunity to enter the foreign market with FDI later. 
B) The local partner understands the customs and mores of the foreign market. 
C) The local partner can provide competent management at many levels. 
D) May be a realistic alternative when 100% foreign ownership is not allowed. 
A) Possible loss of opportunity to enter the foreign market with FDI later. 
B) The local partner understands the customs and mores of the foreign market. 
C) The local partner can provide competent management at many levels. 
D) May be a realistic alternative when 100% foreign ownership is not allowed.

Question 18

The owner-specific advantages of OLI must be:

Accepted Answer

A) firm-specific. 
B) not easily copied. 
C) transferable to foreign subsidiaries. 
D) all of the above 
A) firm-specific. 
B) not easily copied. 
C) transferable to foreign subsidiaries. 
D) all of the above

Question 19

MNEs that are resident in liquid and unsegmented capital markets are more likely to be able to demonstrate financial strength by achieving and maintaining a global cost and availability of capital.

Accepted Answer

A) True 
 B)False

All of the following may be justification for a strategic alliance EXCEPT:

A/An ________ would be an example of an owner-specific advantage for an MNE.

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

As a general rule, the decision about where to invest abroad for the first time is the same as the decision about where to reinvest abroad.

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds, and political risk is often minimized.

Business risk can be measured through sensitivity analysis but from only the project viewpoint.

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Which of the following is NOT a factor of Porter's "diamond of national advantage"?

________ industries are NOT typically "protected" by government policy.

The authors were unable to identify in lesser developed countries specific firms that are nearing the status of global MNE.

The L in OLI refers to an advantage in a firm's home market that is a:

In practice, when expanding into other countries, firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

A number of institutional services provide updated country risk ratings on a regular basis. This is an example of micro-risk information for MNEs using this data.

The I in OLI refers to an advantage in a firm's home market that is an:

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Which of the following is NOT an advantage to a joint venture?

The owner-specific advantages of OLI must be:

MNEs that are resident in liquid and unsegmented capital markets are more likely to be able to demonstrate financial strength by achieving and maintaining a global cost and availability of capital.

Current Multinational Challenges and the Global Economy

Corporate Ownership, Goals, and Governance

The International Monetary System

The Balance of Payments

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Portfolio Theory and Diversification

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters

Exam 17: Foreign Direct Investment and Political Risk

All of the following may be justification for a strategic alliance EXCEPT:

A/An ________ would be an example of an owner-specific advantage for an MNE.

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

As a general rule, the decision about where to invest abroad for the first time is the same as the decision about where to reinvest abroad.

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds, and political risk is often minimized.

Business risk can be measured through sensitivity analysis but from only the project viewpoint.

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Which of the following is NOT a factor of Porter's "diamond of national advantage"?

________ industries are NOT typically "protected" by government policy.

The authors were unable to identify in lesser developed countries specific firms that are nearing the status of global MNE.

The L in OLI refers to an advantage in a firm's home market that is a:

In practice, when expanding into other countries, firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

A number of institutional services provide updated country risk ratings on a regular basis. This is an example of micro-risk information for MNEs using this data.

The I in OLI refers to an advantage in a firm's home market that is an:

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Which of the following is NOT an advantage to a joint venture?

The owner-specific advantages of OLI must be:

MNEs that are resident in liquid and unsegmented capital markets are more likely to be able to demonstrate financial strength by achieving and maintaining a global cost and availability of capital.

Current Multinational Challenges and the Global Economy

Corporate Ownership, Goals, and Governance

The International Monetary System

The Balance of Payments

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Portfolio Theory and Diversification

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters