Chapter 8 MiGE

Since World War II, the largest source country for FDI has been Multiple Choice a. the United States. b. Japan. c. China. d. Germany. e. India.

a

The _____ of FDI refers to the amount of FDI undertaken over a given time period (normally a year). Multiple Choice a. flow b. portfolio c. ratio d. stock e. bundle

a

One reason FDI has been historically low in Japan is because of the Japanese Multiple Choice a. economy. b. government regulations. c. currency. d. culture. e. infrastructure.

b

A firm's bargaining power is low when the host government places a low value on what the firm has to offer. True or False

true

Franchising is essentially the service-industry version of licensing, although it normally involves much longer-term commitments than licensing. True or False

true

According to the pragmatic nationalist view, no country should ever permit foreign corporations to undertake FDI. True or False

False

When a firm exports its products to a foreign country, foreign direct investment occurs. True or False

False

By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing. True or False

True

The stock of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time. True or False

True

Pizza Hut licenses its brand name to foreign firms as long as they agree to run their restaurants on exactly the same lines as Pizza Hut's restaurants elsewhere in the world. In return, the foreign firms have to pay Pizza Hut a percentage of their profits. According to this information, which of the following is being done by Pizza Hut? Multiple Choice a. entering a strategic alliance b.franchising c. undertaking a greenfield investment d. offshoring e. exporting

b

Which of the following involves the establishment of a new operation in a foreign country? Multiple Choice a. licensing b. greenfield investment c. externality d. joint venture e. acquisition

b

One reason the Japanese government, like any other government, would provide incentives for inward FDI is because of the resource-transfer and ____________ effects of FDI. Multiple Choice a. modernizing b. stability c. employment d. innovative e. currency

c

The United States is an attractive destination for foreign investment for all of the following reasons except Multiple Choice a. its large and wealthy market. b. the openness of the market. c. its favorable military power. d. its favorable political environment. e. its dynamic economy.

c

The difference between the flow and the stock of FDI is the ___________ FDI. Multiple Choice a. total vs. amount b. fluid vs. static c. amount vs. total d. external vs. internal e. foreign vs. domestic

c

When the Japanese government realized it needed more foreign investment, though that would have both benefits and costs, it was adopting the __________ view of FDI. Multiple Choice a. radical b. free market c. pragmatic nationalism d. international e. shifting nationalist

c

According to _____, location-specific advantages are of considerable importance in explaining both the rationale for and the direction of foreign direct investment. Multiple Choice a. the infant industry argument b. market imperfections theory c. internalization theory d. the eclectic paradigm e. Knickerbocker's theory

d

All of the countries below are considered to be significant investors in foreign markets over the last 20 years except Multiple Choice a. Britain. b. France. c. Germany. d. Canada. e. Japan.

d

Licensing is a good option to enter a foreign market when Multiple Choice a. trade barriers between countries are trivial in nature. b. transportation costs are minor. c. the technical know to be shared is extremely valuable. d. tight control of the foreign operation is not required. e. the competitive advantage of a firm is based upon managerial knowledge that is embedded in the routines of the firm.

d

Omega, Inc., a U.S. business entity, took a 27 percent equity interest in Almodovar Holdings, a Spanish family business. According to the U.S. Department of Commerce, this would be an example of Multiple Choice a. reciprocal foreign investment. b. asset divestment. c. multilateral investment. d. foreign direct investment. e. international divestment.

d

According to the pragmatic nationalist view Multiple Choice a. the multinational enterprise (MNE) is an instrument of imperialist domination. b. international production should be distributed among countries according to the theory of comparative advantage. c. no country should ever permit foreign corporations to undertake FDI. d. FDI is a benefit to both the source country and the host country. e. FDI should be allowed so long as the benefits outweigh the costs.

e

Mall-Mart's goal was to use ____________ from its successful U.S. stores to boost Shoppu's performance. Multiple Choice a. exactly the same practices b. global practices c. extra revenues d. trendy items e. best practices

e