Chapter 8 INTBUS Go Global

If one firm in an oligopoly cuts prices, then most likely, its competitors:

Will also cut prices

Dunning's theory helps explain:

internationalization theory?

FDI is risky because of the problems associated with:

inverse effects on competition and balance of payments and a perceived loss of national sovereignty.

A current account deficit is also known as a(n) _____ deficit.

trade

A firm becomes a(n) _____, once it undertakes FDI.

MNE multinational enterprise

The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the _____.

competitive advantage and management is not amenable to licensing.

In the balance of payments, the _____ account records transactions involving the export and import of goods and services.

current

Which of the following is most likely to be the effect of FDI in the form of a greenfield investment on the host country?

greenfield investment takes more time to build up. and it is less risky....? It drives down prices and increases the economic welfare of consumers.

The pragmatic nationalist view is that :

non radical policy or a free market policy toward FDI but that FDI has benefits and costs, not al profiets stay in country and can affect balance of payments position.

Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting?

often constrained by transportation costs and trade barriers. ex. low value to weight ratio and can be produced anywhere is bad for exporting.