Global Bus 187 SB Ch 8

what country has been the largest source of FDI since world war II?

United States

which country was a favorite Target for FDI inflows during the 1980s and 1990s?

United States; many nations send products here

which of these factors creates a limitation to exporting?

a product that can be produced almost anywhere

the stock of foreign direct investment refers to the total

accumulated value of foreign owned assets at a given point in time

past activity of FDI shows that the majority of it has been directed at

developed Nations

attempts to combine the theoretical theory into a single holistic explanation of foreign direct investment

eclectic paradigm

Kimberly's company produces body lotion in the United States and ships it overseas to retail stores that sell the product. her company is delivering product through

exporting

the ____ of FDI describes the amount of FDI undertaken during a year.

flow

a ______ strategy is favored over exporting when transportation costs or trade barriers are prohibited.

foreign direct investment

_______ allows a company to collect a royalty fee from a foreign firm that it has granted the right to produce and sell its products.

licensing

the limits of______include giving away valuable know how to competitors and losing control over marketing, production, and strategy.

licensing; aka think: franchising

exporting strategy does not work for a _____ value to weight ratio product that can be produced anywhere.

low; to be worth it demand must be high and low competition

a _____ is an industry made up of a limited number of large firms where there is an interdependence of the major players.

oligopoly

the various theories of FDI tried to explain the _____ of FDI flows, which deals with why certain locations are favored as targets of FDI.

pattern

the various theories of FDI try to explain the ____ of FDI flows, which deals with why certain locations are favored as targets of FDI.

pattern

the _____ of FDI measures the total accumulated value of a company's foreign owned assets at a specific time.

stock

how has the flow of FDI compared to the growth in world trade since 1990?

the flow of FDI has accelerated faster than the growth in the world trade.

along with the United states, which five countries accounted for 60% of all FDI outflows from 1998 to 2018?

japan, germany, france, the United kingdom, and the Netherlands. these countries send products elsewhere. these are the largest multinationals, home to the largest and best capitalized enterprises. they all look for foreign markets and trading nations to fuel their economic expansion. it is safe to say to invest in developing countries now. U.S. believes to buy cheap and sell at a high price their own production.

internalization theory tries to explain why firms often prefer FDI over ______ as a method for getting into foreign markets.

licensing

Grant's company has given a company in Japan the right to produce and sell its line of activewear. for every article of clothing the Japanese company sells, it pays grant's company a fee. this is an example of

licensing. think: franchising or intellectual property

according to international theory, a company would rather gain entrance into a foreign market by using

FDI.it is preferred over licensing because it is a strategy for entering foreign markets. this approach is called market imperfections approach.

what are the two types of fdi?

establishing a new operation in a foreign market. acquisition or merger with an existing foreign firm.

the text notes two reasons why FDI has outpaced world trade and world output. what are those two reasons?

even though trade barriers are diminishing, firms still fear protectionist pressures. FDI has been driven by political and economic changes in developing nations.

when a company produces a good in the home country and then ships it to another country for sale it is called

exporting

establishing a new operation in a foreign market and acquiring or merging with a foreign business are examples of

foreign direct investment

what is a company participating in when it directly invests in facilities to produce or market in a foreign country?

foreign direct investment

when a firm invests directly in a foreign market to produce or market a product, it is called

foreign direct investment (FDI)