Question 1

The benefit of ownership lies in the combination of equity ownership rights and management control rights.

Accepted Answer

A) True 
 B)False

Question 2

Investing in FDI will increase the home firm's exports of components and services.

Accepted Answer

A) True 
 B)False

Question 3

MNEs' possession and leveraging of certain valuable,rare,hard-to-imitate,and organizationally embedded (VRIO)  assets overseas in the context of FDI refer to _____.

Accepted Answer

A)   location 
B)   ownership 
C)   internalization 
D)   market imperfectionsE) C) and D)
F) B) and C)

Question 4

Which of the following is a primary cost of FDI to home countries?

Accepted Answer

A)   Loss of sovereignty 
B)   Increase in local competition 
C)   Capital outflow and job loss 
D)   Increased exports of components and services to host countriesE) None of the above
F) A) and D) C

Question 5

Capital inflow can help improve a host country's balance of payments.

Accepted Answer

A) True 
 B)False

Question 6

_____ suggests that FDI,unrestricted by government intervention,will enable countries to tap into their absolute or comparative advantages by specializing in the production of certain goods or services.

Accepted Answer

A)   The radical view 
B)   The free-market view 
C)   Pragmatic nationalism 
D)   The monopolistic viewE) B) and C)
F) All of the above

Question 7

Intrafirm trade refers to international transactions between two subsidiaries in a country controlled by two different MNEs.

Accepted Answer

A) True 
 B)False  False

Question 8

Identify the benefits and costs of FDI to home countries.

Accepted Answer

There are three benefits to home countri...

Question 9

FDI stock refers to the accumulation of inbound FDI in a country or outbound FDI from a country.

Accepted Answer

A) True 
 B)False

Question 10

Harton,a car manufacturer based in UK,only assembles cars and does not manufacture components in the UK.But in France,Harton enters into components manufacturing through FDI.Harton's investment in France would be an example of a(n)  _____.

Accepted Answer

A)   FPI 
B)   downstream vertical FDI 
C)   upstream vertical FDI 
D)   horizontal FDIE) A) and D)
F) A) and B)

Question 11

_____ refers to the ability to extract favorable outcome from negotiations due to one party's strengths.

Accepted Answer

A)   Expropriation 
B)   Bargaining power 
C)   Compromising power 
D)   Accommodating powerE) B) and C)
F) A) and B) B

Question 12

_____ refers to the replacement of cross-border markets with one firm locating in two or more countries.

Accepted Answer

A)   Location advantage 
B)   Ownership advantage 
C)   Internalization 
D)   AgglomerationE) All of the above
F) A) and B)

Question 13

Economic agglomeration is an example of a location advantage.

Accepted Answer

A) True 
 B)False

Question 14

Differentiate between the radical,the free market and pragmatic nationalism view on FDI.

Accepted Answer

There are three primary political views ...

Question 15

The resource-based view argues that internalization is a response to the imperfect rules governing international transactions.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a primary cost of FDI to host countries?

Accepted Answer

A)   Capital inflow 
B)   Increase in competition between local firms 
C)   Capital and job loss 
D)   Loss of sovereigntyE) All of the above
F) C) and D)

Question 17

_____ refers to the deal struck by MNEs and host governments,which change their requirements after the initial FDI entry.

Accepted Answer

A)   Obsolescing bargain 
B)   Integrative bargain 
C)   Automated bargain 
D)   Ongoing bargainE) All of the above
F) A) and D)

Question 18

Why do firms prefer FDI to licensing?

Accepted Answer

(1) FDI reduces dissemination ...

Question 19

_____ refers to international transactions between two subsidiaries in two countries controlled by the same MNE.

Accepted Answer

A)   Intrafirm trade 
B)   Oligopoly 
C)   Agglomeration 
D)   MonopolizationE) All of the above
F) B) and C)

Question 20

Identify the benefits and costs of FDI to host countries.

Accepted Answer

The benefits of FDI to host countries:
1...

Exam 6: Investing Abroad Directly

The benefit of ownership lies in the combination of equity ownership rights and management control rights.

Correct AnswerverifiedShow Answer

Investing in FDI will increase the home firm's exports of components and services.

Correct AnswerverifiedShow Answer

MNEs' possession and leveraging of certain valuable,rare,hard-to-imitate,and organizationally embedded (VRIO) assets overseas in the context of FDI refer to _____.

Correct AnswerverifiedShow Answer

Which of the following is a primary cost of FDI to home countries?

Correct AnswerverifiedC

Capital inflow can help improve a host country's balance of payments.

Correct AnswerverifiedShow Answer

_____ suggests that FDI,unrestricted by government intervention,will enable countries to tap into their absolute or comparative advantages by specializing in the production of certain goods or services.

Correct AnswerverifiedShow Answer

Intrafirm trade refers to international transactions between two subsidiaries in a country controlled by two different MNEs.

Correct AnswerverifiedFalse

Identify the benefits and costs of FDI to home countries.

Correct AnswerverifiedThere are three benefits to home countri...View AnswerShow Answer

FDI stock refers to the accumulation of inbound FDI in a country or outbound FDI from a country.

Correct AnswerverifiedShow Answer

Harton,a car manufacturer based in UK,only assembles cars and does not manufacture components in the UK.But in France,Harton enters into components manufacturing through FDI.Harton's investment in France would be an example of a(n) _____.

Correct AnswerverifiedShow Answer

_____ refers to the ability to extract favorable outcome from negotiations due to one party's strengths.

Correct AnswerverifiedB

_____ refers to the replacement of cross-border markets with one firm locating in two or more countries.

Correct AnswerverifiedShow Answer

Economic agglomeration is an example of a location advantage.

Correct AnswerverifiedShow Answer

Differentiate between the radical,the free market and pragmatic nationalism view on FDI.

Correct AnswerverifiedThere are three primary political views ...View AnswerShow Answer

The resource-based view argues that internalization is a response to the imperfect rules governing international transactions.

Correct AnswerverifiedShow Answer

Which of the following is a primary cost of FDI to host countries?

Correct AnswerverifiedShow Answer

_____ refers to the deal struck by MNEs and host governments,which change their requirements after the initial FDI entry.

Correct AnswerverifiedShow Answer

Why do firms prefer FDI to licensing?

Correct Answerverified(1) FDI reduces dissemination ...View AnswerShow Answer

_____ refers to international transactions between two subsidiaries in two countries controlled by the same MNE.

Correct AnswerverifiedShow Answer

Identify the benefits and costs of FDI to host countries.

Correct AnswerverifiedThe benefits of FDI to host countries:1...View AnswerShow Answer

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C

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False

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There are three benefits to home countri...
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B

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There are three primary political views ...
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(1) FDI reduces dissemination ...
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The benefits of FDI to host countries:
1...
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