INB quiz 6
___ is the amount of FDI moving in a given period (usually a year) in a certain direction
FDI flow
when market failure is minimized through internalization __ .
a single organization between two firms is established
when one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in host country to:
acquire location advantages
Folexa is the largest producer of spices in the world, and its location is an added advantage to its business. It is surrounded by six trading countries. Besides, located close to the southern region of the continent, it attracts business from the neighboring continents as well. Such clustering of economic activities is referred to as _____.
agglomeration
which of the following is a cost of FDI to a host country?
decisions to produce and market products and services in a host country are being made by foreigners resulting in a loss of sovereignty
__ is defined as the possibility of unauthorized diffusion of firm-specific know-how
dissemination risk
knowledge that can be written down and transferred without losing much of its richness is called __
explicit knowledge
Most countries embrace the free market view on FDI (T/F)
false
in the long run, the interests of MNEs in host countries can be best safeguarded if MNEs neglect the interest of hosts countries (T/F)
false
international transaction costs tend to be lesser than domestic transaction costs (T/F)
false
in the context of foreign direct investment, which of the following statements is true of ownership advantages?
firms can beat rivals abroad by acquiring the advantage of proprietary technology of manufacturing products
__ refers to holding securities, such as stocks and bonds, of companies in countries outside one's own, but does not entail the active management of foreign assets
foreign portfolio investment
which of the following statements is true of the radical view on FDI?
governments embracing this view often nationalize MNE assets of simply ban inbound MNEs
the international trade between two subsidiaries in two countries controlled by the same MNE is called __
intrafirm trading
which of the following statement is true of internalization?
it involved locating and operating in host countries
which of the following statements is true of direct ownership?
it provides a firm with equity ownership rights and management control rights
which of the following is a benefit of FDI for the host country?
job creation
Bandoy Corp., a renowned cell phone manufacturing company, decided to engage in international. So, Bandoy Corp. sold its technology to serveral multinational enterprises in other countries. This market entry mode is an example of __ .
licensing
a United States MNW decides to move operations to a developing nation in Central America to take advantage of the regions low labor costs. this is an example of an MNE in pursuit of __ advantage
location
within the context of FPI, __ rights are the rights to appoint key managers and establish control mechanisms
management control
from an institution based view, internalization is a response to:
market imperfections
HiSpark Inc., believes that it has to possess, rare, hard-to-imitate technology, value brand name and organizationally embedded culture to achieve consistent success as a MNE. In this case, HiSpark Inc. is focusing on:
ownership advantage
the __ is a political view that approves FDI only when its benefits outweigh its costs
pragmatic nationalism view on FDI
in international business, when a host country firm acts opportunistically, __
suing the opportunistic firm in a foreign country is costly and uncertain
Bricklanes Inc. is a company that designs and manufactures materials for interior decorations. The company expands its business in Cronje Republic to gain the advantages of foreign direct investment. As a result, several companies in Cronje Republic have adopted new advancements that are introduced by Bricklanes Inc. in their processes. In this case, which of the following benefits has the host country acquired?
technology spillover
__ refers to the domestic diffusion of foreign technical knowledge and processes
technology spillover
which of the following political views on FDI does not exist in practice?
the free market view on FDI
which of the following political views is hostile to FDI
the radical view on FDI
A paper company is opening a new branch. In addition to providing the new branch manager and employees with handbooks detailing their jobs, the firm places experienced personal at the new branch for 6 months to teach hands-on skills and share their know-how. In this scenario, the handbooks transfer explicit knowledge, while the experienced personnel insure the acquisition of tacit knowledge (T/F)
true
FDI results in the loss of some economic sovereignty in a host country (T/F)
true
FDI stock is the total accumulation inbound FDI in a country or outbound FDI from a country (T/F)
true
OLI advantages refer to the advantages of ownership (O), location (L), and internationalization (I) (T/F)
true
Tacit knowledge is noncodifiable and its acquisition and transfer requires hands-on practice (T/F)
true
a MNE, by definition, is a firm that engages in foreign direct investment when doing business abroad (T/F)
true
a non-multinational enterprise (non-MNE) firm can do business abroad by exporting (T/F)
true
in the context of international investment, FPI is an indirect investment (T/F)
true
the UN defines FDI as an equity stake of 10% or more in a foreign-based enterprise. a lower percentage investment in a foreign firm is considered FPI (T/F)
true
the quest for location advantages has to fit with a firm's strategic goals (T/F)
true
Picnia Corp., a leading automobile manufacturing company, assembles its cars in Deltaland, but the components are manufactured in Ristasia. In this scenario, Picnia Corp. has engaged in:
upstream vertical FDI
__ refers to a type of FDI in which firms move upstream or downstream in different value chain stages in a host country
vertical FDI
