exam 2

For JCB, foreign direct investment in India was initially preferable to exporting because

India had high tariff barriers.

JCB's joint venture in India with Escorts can best be described as

a greenfield investment.

If the firm is facing the threat of trade barriers such as high import tariffs or quotas and the firm has proprietary technology, the firm should consider

foreign direct investment.

Dipper Donuts licenses its brand name to foreign firms as long as they agree to run their restaurants on exactly the same lines as Dipper Donuts restaurants elsewhere in the world. In return, the foreign firms have to pay Dipper Donuts a percentage of their profits. This is an example of

franchising.

JCB's joint venture in India with local conglomerate Escorts

is an example of foreign direct investment.

JCB operates several factories in India employing more than 5,000 workers. Which best characterizes JCB's impact on India?

India benefits from employment effects.

The eclectic paradigm is based on the idea that intellectual property is of considerable importance in explaining the direction of FDI.

False

When a nation puts government-backed insurance programs in place to cover major types of foreign investment risk, it has the effect of

encouraging outward FDI by a home country.

If your household goods can be efficiently produced through economies of scale, it would be a good idea to use a(n) _______ strategy.

exporting

The effect of bulky or heavy products on transportation costs can make _______ an inappropriate strategy.

exporting

If your proprietary know-how of "green" processes is difficult to transfer to other firms, the most effective approach would be

exporting or foreign direct investment.

Internalization theory is used to explain why a company prefers FDI over __________ as a way to enter a foreign market.

licensing

If a firm's know-how, skills, and capabilities can be protected by contract, and if tight control over foreign operations is not vital to remain competitive, and there are reasons to believe that additional costs through transportation or tariffs would be high, the most effective approach would be

licensing.